A Narrative Violation on a Friday Morning

I set out to write a very different post : one with the thesis that venture capital holding periods were lengthening relative to private equity.

But the data violates the narrative!

Conor Quigley at PitchBook ran an analysis on Theory’s behalf to answer the question: How many years from the first funding round to exit on average between PE & VC?

The answer is it’s about the same : 5 years.

There’s no doubt that the exit markets have been extremely quiet until the beginning of the summer of this year. But there is no yawning gap in holding periods between private equity & venture capital.

There is survivorship bias in the data. We are only measuring companies that have exited, not the backlog or the average age of the backlog.

However, looking at the exit counts, we see relatively consistent volumes year over year. This suggests that the data should not be hugely skewed.

Venture capital generates roughly 10 times more exits annually than PE in the software sector. VC exits peaked at 638 companies in 2021, while PE reached just 79 exits that same year. Aside from a big spike in 2021 for both asset classes, the deal volumes have been relatively consistent.

The secondary market in venture capital should continue to grow, but not because VC holding periods are longer than PE. Instead, it should grow because VC generates 10 times more exits annually, creating more liquidity opportunities.

Scale, not latency, drives secondary market potential.

1. Exit counts are limited to companies with a First VC or PE Deal Date. Only M&A & IPO exits are included in the data. This exclusively covers US-based companies tagged to the Software Industry Group. Data as of August 20th, 2025.