The old VC mindset of "let your winners run" and waiting for an IPO is gone. Today's GPs must act as fiduciaries by creating liquidity plans, proactively orchestrating secondary sales, and navigating complex buyout deals with partial rollovers to generate returns for LPs.

The traditional venture model focused on buying and holding. In today's market, where companies stay private longer, a VC's fiduciary duty to LPs has evolved. It now includes proactively selling portions of high-valued private holdings in the secondary market to generate distributions (DPI), even if it creates friction with founders.

The traditional IPO exit is being replaced by a perpetual secondary market for elite private companies. This new paradigm provides liquidity for investors and employees without the high costs and regulatory burdens of going public. This shift fundamentally alters the venture capital lifecycle, enabling longer private holding periods.

Top companies like Stripe are staying private for decades, extending the time VCs need to return capital to LPs. This shift from a 7-9 year cycle to a 16-20 year one fundamentally changes fund structure and liquidity expectations for both GPs and LPs.

Just as buyout funds began selling portfolio companies to other buyout funds post-2000, VCs now increasingly exit via secondary sales to other VC or PE firms. This has become a dominant liquidity path over traditional IPOs or strategic M&A.

While investing (buying) gets the attention, the actual job of a VC is disciplined selling to return capital to LPs. This requires constantly re-underwriting positions to determine if they can still meet the fund's target returns from their current valuation, rather than holding on indefinitely.

The abundance of private capital means the most successful companies no longer need to go public for growth funding. This disrupts the traditional VC model, where IPOs are a primary exit path, forcing firms to re-evaluate how and when they achieve liquidity for their limited partners, even for their best assets.

Secondary markets have grown to record volumes, representing a significant portion of venture activity. For VCs and employees, selling shares in these markets is becoming as common an exit strategy as traditional IPOs or acquisitions, providing crucial liquidity.

With fund lifecycles stretching well beyond the traditional 10 years, LPs are increasingly seeking liquidity through secondary sales. This trend isn't just a sign of pressure but a necessary market evolution to manage illiquid, long-duration assets.