'It's Liquidity Stupid.' Venture Capital Faces Liquidity Crunch Amid Sparse IPOs As AI Gobbles Up Investments

The venture capital industry is grappling with a challenging landscape due to a lack of initial public offerings and mergers & acquisitions activity, which has dried up liquidity. Venture capitalists Edith Yeung of Race Capital and Larry Aschebrook of G Squared highlighted these issues at the Web Summit in Lisbon. While buzzy AI companies like OpenAI and Wiz attract substantial investment, traditional exits like IPOs remain scarce, restricting VCs' ability to cash out. Yeung emphasized that liquidity is crucial for VCs, enabling them to reinvest. Aschebrook noted that despite high funding in AI, much capital remains illiquid. Both investors also see potential outside AI, in sectors like cybersecurity and crypto.