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Limited partners (LPs) investing in venture capital (VC) firms are navigating a liquidity crisis as funds now outlive traditional expectations, creating challenges for institutional investors. The panel highlighted that many funds are 15-20 years old, holding valuable assets but facing severe illiquidity. LPs are adjusting allocation models, with some adopting 18-year fund lifespans and prioritizing conservative strategies. Secondaries markets are becoming essential for liquidity, with experts urging active engagement. Valuation gaps between VC optimism and secondary market realities are causing significant discounts for portfolio companies.
Key facts
- Venture capital funds are surviving far beyond their original 13-year lifespan, with some reaching 20 years and still holding high-value assets.
- Secondary market valuations often discount portfolio companies by 80-90% compared to VC-assigned valuations, creating a stark liquidity gap.
- Emerging managers face extreme fundraising challenges, raising only 1.7 times the amount of all emerging managers combined in 2025.
- The panel agreed venture capital is not a traditional asset class due to extreme return dispersion among managers.
- LPs are increasingly selling shares in up rounds through secondaries, with 30% of distributions in 2024 coming from premium sales.
TAGS:
#asset class #emerging managers #fund management #limited partners #liquidity crisis #portfolio strategy #private equity #secondaries #valuation gap #venture capital
