Unanswered prayers for exits
The data is in, and it has confirmed what everyone's suspected: Venture-backed exits this year are on track to hit a five-year low, per Pitchbook.
Why it matters: Fewer distributions back to VCs' own investors are adding to the ongoing squeeze those investors have been feeling. The market's in turmoil, and many have been stretching their allocations into the asset class during the pandemic boom.
Zooming in: With the IPO window virtually shut most of this year, it's no surprise that almost 50% of exit value so far this year has come from acquisitions.
- The last time acquisitions represented about this portion of exit value was in 2018. Last year, 86% came from public listings, which represented a record 16% of exit counts.
And so far this year, seed-stage startups are the majority of venture-backed companies getting acquired — the highest proportion since at least 2012.
- This suggests that a slew of smaller companies may be opting for a sale amid the more challenging fundraising environment.
Yes, but: One brighter spot is that median acquisition exit value remains above historical figures, at about $100 million. That's up from $66.6 million last year.
- Meanwhile, median public listing and buyout values plunged to $353.6 million and $65 million, respectively (down from $722.5 million and $175 million).
The bottom line: All eyes are on what 2023 holds for exits.