Why Your Best Exit Might Be the One Your VCs Never Mention
 
For the past three years, we've all been waiting for the IPO window to reopen. We've trimmed burn rates, extended runways, and told ourselves that public markets would eventually return to their senses. But what if the wait isn't the problem? What if the entire exit landscape has fundamentally shifted whilst we've been staring at that closed window?
 
Pitchbook’s latest numbers reveal a remarkable story. In 2021, IPOs represented just 15.2% of European exits but delivered a staggering 62.5% of the value - the golden ratio that made venture capital mathematics work. Fast forward to 2025, and IPOs have collapsed to just 2% of exits, contributing only 32.3% of value even with Klarna's €12.7 billion listing propping up the figures.
 
This isn't a temporary blip. It's a fundamental restructuring of how venture-backed companies achieve liquidity. And whilst everyone fixates on when IPOs will return, a different reality has quietly taken shape. The European exit market now offers three distinct paths, each with radically different economics and implications for how you build your company.
 
 
The mathematics of disappointment
 
Let's start with why your investors have suddenly become so cautious about new investments. It's not just market sentiment or macro headwinds - it's pure mathematics.
 
When IPOs delivered 62.5% of exit value despite being only 15.2% of exits, every venture fund could survive on one or two breakout public listings. Those massive multiples covered the losses from failed investments and still delivered the 3x returns LPs expected.
 
But today's reality is starkly different. Without IPOs providing that leverage, VCs need many more successful exits to generate the same returns.
 
The maths simply doesn't work anymore. Looking at Q3 2025 across Europe, there were just eight VC exits that exceeded €100 million. Of these, two were public listings (including Klarna at €12.8 billion), four were corporate acquisitions, and two were buyouts. The outliers aren't just rare; they're virtually extinct.
 
This explains the sudden obsession with profitability, the reluctance to fund growth-at-all-costs strategies, and the pressure to consider exit opportunities that would have been dismissed as "too small" just three years ago. Your investors aren't being irrational - they're adapting to a world where the grand slam IPO can no longer save their portfolio.
 
 
The acquisition reality
 
With IPOs out of the picture, it’s tempting to think that the target exit must instead be a corporate acquisition. Yes, acquisitions represent 70% of European exits year to date, but they account for only 44% of exit value. The average European M&A exit (combining acquisitions and buyouts) sits at around €53 million - respectable, but hardly the stuff of venture dreams.
 
And there’s another key insight to consider. The timing of these acquisitions has shifted dramatically. Reflecting a global trend in M&A timing, strategic buyers are increasingly acquiring companies at earlier stages - before most have built significant scale. Strategic buyers, particularly in AI, aren't waiting for companies to mature. They're acquiring talent and early technology, not scaled businesses.
 
This creates a ‘valuation trap’. Consider this: thousands of European startups raised rounds in 2021-22 at valuations that are now way above market. A SaaS company with €5 million ARR might have raised at a €150 million valuation - 30x revenue when money was free. Today, that same company might have grown to €10 million ARR, but acquisition offers are coming in at €80-100 million - a healthy 8-10x multiple in normal times, but below their last round valuation.
 
They're potentially trapped. Once liquidation preferences from the last round and the preference stack behind it kick in, an €80-100 million offer is unlikely to excite anyone - VCs won't get the returns they wanted, and after preferences, there may not be much left for ordinary shareholders like founders and employees. They can't raise an up-round without dramatic growth. And they can't easily raise a down-round without triggering anti-dilution provisions. Each subsequent round you raise adds liquidation preferences that can block reasonable exits. That ambitious Series C round at a €150 million valuation? It might actually reduce your exit options rather than expand them.
 
 
The exit nobody wants to talk about
 
With IPOs and M&A looking so problematic, startups are finding a third way. Here's something few founders are aware of: Buyouts have surged from just 8% of European VC-backed exits in 2006-2010 to 24% for 2024. Even more striking, for French software companies exiting above €50 million in the last four years, 81% were PE-led buyout deals. Across Europe, buyouts have continued upwards in 2025 representing 27% of all exits by number and 23% by value. In the US, they account for only 15% of value. Europe is leading a trend that most Silicon Valley VCs would rather ignore.
 
What exactly is a buyout? Mostly likely it’s a Private Equity acquisition, although it could be a secondary purchase by other VCs. The key thing to know is that PE buyers value different things than strategic acquirers or public markets. They want profitable, sustainable businesses with predictable cash flows - essentially, everything venture-backed startups are taught not to prioritise. Until your revenue growth falters and profitability suddenly becomes the only path forward.

Why don't VCs talk about this option? Because the entire venture model is built on the dream of strategic outliers - finding that one corporate buyer who sees such immense strategic value that they'll pay 15-20x revenue, making pricing a bet on synergies rather than standalone returns. These outlier exits have historically saved VC funds, justifying the risk of backing dozens of failures.
 
But today’s reality? Those outliers have become vanishingly rare. And when you compare the multiples, PE buyouts pay higher than corporate acquirers in Europe - around 11.2x EBITDA versus 8.5x for corporates. PE firms are being disciplined but consistent, whilst strategic buyers have become increasingly selective and price-conscious.
 
The prompt for founders is a buyout might now be the smartest exit available. These buyers don't demand hockey-stick growth. They value profitability, sustainable unit economics, and sensible burn rates - metrics that are actually within your control.
 
Moreover, PE buyers often retain existing management, allowing founders to continue running their companies without the quarterly scrutiny of public markets.
 
Of the top 10 European exits in Q3 2025, two were buyouts: GT Get Taxi Systems at €163 million and Beekeeper at €109 million. Both were profitable software businesses - exactly the profile PE buyers seek.
 
 
Why geography trumps everything
 
One other huge factor in the exit story: Where you're based matters more than what you build. The US saw 1,135 exits year to date versus Europe's 781, creating competition amongst buyers that drives up prices. But it's not just about volume.
 
US buyers pay higher multiples across every sector and stage - and crucially, across all three exit routes. US M&A exits have averaged around €100 million versus Europe's €53 million in 2025 so far. The IPO markets are deeper and more receptive to tech companies. Strategic acquirers compete more aggressively, driving M&A valuations higher. Even PE buyers in the US have more capital to deploy and greater appetite for venture-backed businesses.
 
This geographic premium affects your access to all three paths out. A US-positioned company has better odds of going public, commands higher acquisition multiples, and attracts more PE interest. It's not a choice between exit routes - geography amplifies them all.
 
Savvy European founders are now more likely to consider Delaware incorporation from day one, prioritising US customers over those closer to ‘home’. They build companies to be acquired by US buyers, not European ones. Pragmatism beats idealism when you're returning capital to investors. But be clear-eyed: positioning for US buyers means you're playing amongst an even tougher peer group. You're betting everything you can build a true outlier.
 
 
The pressure release valve
 
There's one more piece to the 'exit' puzzle: direct secondaries are becoming "of primary importance" for European liquidity. The European secondary market has an estimated potential of $47.5 billion in the base case, yet only $10.7 billion has been transacted over the past decade - leaving a substantial untapped opportunity.
 
For founders, secondaries offer something precious: optionality. Whilst not an exit in the classic sense, they can provide liquidity to early investors, reward employees who've been waiting years for their equity to materialise and take some personal chips off the table - all without selling the company. It's not a complete exit, but it releases pressure and buys time to build toward a better outcome.
 
We covered this topic in detail in September's newsletter, but the key takeaway remains: partial liquidity might enable you to swing for the fences without betting everything on a single outcome.



The Takeaways
 
If you're a founder navigating this transformed landscape, here are the realities you need to work with:
 
Your exit will probably be smaller and earlier than you planned. The reality of European exits means that acquisition at €60 million might be worth more than raising at €150 million and getting trapped above market exit prices. Don't let valuation vanity close off viable paths to liquidity.
 
Profitability expands exit options. PE buyers won't touch companies burning cash with no clear path to profitability. But companies generating €10-30 million revenue with modest EBITDA margins become viable candidates, whilst those above €30 million with 20%+ margins become highly attractive targets. When revenue growth falters, profitability transforms your story from a VC narrative to a PE opportunity.
 
Geography matters more than ever. US exposure from the start isn't optional if you're serious about maximising exit value. US M&A exits average nearly double European valuations. But positioning for US buyers means you're playing for outlier outcomes amongst a tougher peer group. Choose this path only if you're very confident you can build a true standout growth story.
 
Consider alternative liquidity earlier. Secondaries and partial exits might not deliver grand slam IPO returns, but they provide certainty. That secondary sale might enable you to continue building without the pressure of betting everything on a single outcome.

The paths VCs consider failures might be your greatest successes. That PE buyout at 11.2x EBITDA might deliver more cash to founders and employees than waiting five years for an IPO that never comes.
 
The IPO drought has revealed what many suspected: the exit landscape has fundamentally changed. But opportunity exists for founders who build profitable, sustainable businesses capable of multiple exit paths. The exit nobody wants to talk about might just be the one that actually happens.

Let's talk.