#168 VC Velocity Up?! Stripe, Wiz Exits...

And what it means for VC deployment and fundraising from LPs

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Picture of the Day: Stripe & Wiz Potential Exits

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VC Has a Liquidity Problem - Can Stripe/Wiz Fix It?

We’ve talked a lot about venture capital and private assets in general - there is a liquidity problem (see here, here, etc.). Venture capital funds ultimately exist to send more money back to their investors than they received. Hopefully way more money (>5x their initial investment). In recent years, the exits just haven’t been happening - see the chart.

Last week, venture capital investors got some promising news with Sequoia creating an exit opportunity for investors in some of their earlier funds. These investors can cash out their position in Stripe (I wonder how many will do this?). Separately, Google is in talks to acquire Wiz for $23 billion.

[Update]: Wiz walks away from $23 billion deal with Google, will pursue IPO. Hopefully still a nice exit for Wiz and their investors!

The All-In Podcast had a great recap starting at the 1 hour mark this week (skip to this mark if you want to avoid the political discourse):

How Wiz acquisition / IPO could affect VC (TechCrunch)

Over the weekend, Rebecca Szkutak at TechCrunch dove deeper on this topic, linked here. Last night, Wiz announced they were walking away from $23 billion deal with Google and will pursue an IPO. We’ll learn more in the coming days, but part of the rationale was antitrust, as well as investor concerns (maybe they see more upside in an eventual IPO?).

We thought it was still interesting to share excerpts that we had teed up to give a M&A market perspective (back on hold for now): This deal could catalyze momentum in the startup M&A market. The market is ripe for such a significant exit, so VCs are hoping it revitalizes the M&A landscape.

So far in 2024, there have been 356 startup acquisitions in the U.S., per PitchBook data, which suggests the year might not surpass 2023's total of 771 deals.

The potential deal could also positively influence venture fundraising, which is on track to fall below 2023's $81.5 billion total, itself a 57.4% decrease from 2022. The Wiz acquisition [or IPO] could alleviate these concerns, as it represents a fast exit for a relatively young company (founded in 2020), potentially giving VCs leverage in fundraising.

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