Fund Structure
Exit
A liquidity event that allows investors to realize returns on their investment — typically an IPO or acquisition.
An exit is any event that allows investors and founders to convert their equity ownership into cash. The two primary exit mechanisms in venture capital are: IPO (Initial Public Offering), where a company goes public and shareholders can eventually sell shares on public markets; and M&A (mergers and acquisitions), where another company buys the startup, typically paying cash or stock to shareholders. Secondary sales (selling shares to another investor before a liquidity event) are a third, increasingly common exit path. VCs are structurally required to exit investments within their fund's lifecycle (typically 10 years). The exit environment — number and quality of IPOs and acquisitions — directly affects VC fund performance and LP returns.