The third quarter was left behind, but the results are still adding up. This week will bring an avalanche of figures from the main technology companies, which will help us better understand the state of the market, for example. Another third-quarter lens that has yet to be finalized is its venture capital results. We’ve covered the big numbers from the United States, Europe, Latin America, Africa and India, and analyzed the extent to which capital has spread to underrepresented groups.
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But one key area of private market performance that we haven’t yet paid enough attention to is exits. Exits, the conversion of investments into cash or another returnable asset, is the key product of private equity and its subtype of venture capital (no joke about AUM bips being the real product that fits here, but you can write them down yourself) .
We spend a lot of time watching the venture dollars flow into new companies, and not enough, sometimes, in terms of money that is allocated outside. We are going to make up for some lost time, since the exit situation in the market today is very bad. What’s more, the key departures for the third quarter of 2023 serve more to demonstrate how bad things are, not how much departures data can improve as the year draws to a close.
That means the venture got a few IPOs last quarter, and they weren’t enough. We would need to see Q3 2023 output volume levels monthly for year to get back into the starting value ballpark of the 2021 era. That’s an ocean away.
The data is not difficult to analyze. In the first three quarters of 2023, what PitchBook describes as “US VC exit activity” was worth $9.1 billion, $6.6 billion, and $35.8 billion, respectively. Clearly, the final figure is a huge improvement over the previous one, but it was largely based on just a handful of deals, notably the public debuts of Instacart and Klaviyo. PitchBook’s own accounting estimates that those two deals alone were worth “more than a third of the total exit value in the third quarter.”
