In our earlier research, we’ve explored the power law distribution among venture capital’s largest exits, the dominance of top consumer tech exits in terms of size as well as how enterprise exits win from a capital efficiency standpoint.
Here we break down the same top 100 U.S. VC-backed tech exits by the time between their first financing round and their IPO or M&A exit. And based on the data, outside of your Instagram-type outliers, achieving one of the largest VC-backed tech exits will not be a sprint but, more likely, a marathon. But how does the process and time differ on consumer v enterprise – or does it not?
Here’s the data.
Top 100 VC-Backed U.S. Exits Since 2009 – Valuation Distribution Curve
The chart below highlights the power law distribution of venture capital. The largest, by far, was Facebook’s IPO in May 2012 valuing the company at $104 billion. After Facebook, there is a significant dropoff in exit valuations.
Top 100 VC-Backed U.S. Exits Since 2009 – Time to Exit is Random
Looking at these exits by the amount of time between first financing and exit reveals the variability in achieving a notably large venture-backed tech exit. While several notched their exit quickly – just a couple years after their first funding. Others like OpenTable and Zappos too much longer.
On average, it took the 100 largest VC-backed tech exits over the period 6.4 years from first funding to exit with a median of 6.3 years.
The chart buckets the exits by number of years. Over 2/3rds took over 8 years between first funding and exit. The mega exit is rare. The quick mega exit is even rarer.
Top 100 VC-Backed U.S. Exits Since 2009 – Time to Exit By Consumer vs. Enterprise
Interestingly, when we break down time to exit by the market they were going after – consumer vs enterprise, we see no significant difference in average and median time to exit. On average, the consumer tech exits took 6.4 years (from first financing to exit) with a median of 6.3 years, while enterprise exits in the sample took an average of 6.5 years to exit and a median of 6.4 years.
For companies that exited via M&A, the valuation is simply the amount that the company got acquired for. For a company that went public, the exit valuation was that on the day of the IPO. Tech sectors include internet, mobile, software, computer hardware and electronics (chips & semis).
The time period covered ranges from January 1, 2009 to February 24, 2014.
All of the underlying exit and investor data used in this research brief is from the CB Insights Venture Capital Database. Sign up for free below.If you aren’t already a client, sign up for a free trial to learn more about our platform.