On the eve of a historic IPO for Silicon Valley’s investor community, the fragilities of venture are as clear as they’ve ever been to me.
I’ve been thinking about this irony for days: Anthropic is set to go public as soon as next week (everything I’m hearing says “Jensen Huang’s affair be damned, all systems go”), and while this is primed to be a banner moment for VC, venture seems to be structurally over its skis.
Consider recent data from PitchBook: Hitting a $5 billion valuation takes 80% less time, but 74% more capital, according to the company’s latest U.S. Valuations report.
“Higher valuations raise the bar to achieve profitable exits, and AI is expensive to run,” said Emily Zheng, PitchBook senior research analyst, via email. “Cracks are beginning to show in venture, including large amounts of AI-related debt and a likely slowdown in data center expansion given the recent election.”
The reality is this: Valuations are soaring higher and more readily, but exits are still tough. Zheng is clear that the IPO window—unless a company is in a very select group like SpaceX or Anthropic—remains shut.
“The IPO window has not reopened,” she said via email. “Most listings this year have been in health care, with the high-growth tech names LPs need for distributions largely absent. Removing mega IPOs from 2026’s totals reveals that exit value remains at the same constrained level that has defined every year since the pandemic.”
M&A remains a viable option, but in many deals, Zheng said, “valuation compression remains the dominant theme, as Q3 revealed with Bending Spoons’ acquisitions of Airtable and Miro at significant discounts.” (Airtable, for example, was acquired for $1.28 billion in cash, a vertiginous drop from its 2021 $11.7 billion peak valuation.) Rising rates and broader economic uncertainty are primed to render these pressures worse.
Historical data also suggests the current venture vintage could be in trouble, according to PitchBook’s recent U.S. VC Fundraising and Returns data: Past funds haven’t necessarily performed well during periods characterized by high interest rates (new Federal Reserve Chair Kevin Warsh already hiked rates once in 2026, and another hike’s on the table for December). There’s no way to prove causality, but the stressors of high rates, high valuations, and sluggish exits definitionally create pressure.
“The current market is a strange mix of high prices, low liquidity, and a relatively uncertain outlook,” said Zheng via email. “ The outlook for current vintages will likely not look as great as their current markups.”
And as the day of Anthropic’s seemingly imminent IPO approaches, it’s worth remembering that post-IPO performance has been dicey for the few major IPOs we’ve seen: CoreWeave and Circle, up about 52% and 116% respectively since their listing days, are the exception. Figma’s down about 42% in its life as a public company, while Cerebras is down roughly 45%. Nevertheless, what happens next with Anthropic will be the harbinger of where venture and startups go from here.
“Strong performance would validate AI’s enormous private valuations, spurring dealmaking and exit activity as real distributions are injected back into LP portfolios,” said Zheng via email. “Weak performance would bring into question whether AI companies are wildly overvalued.”
That is, of course, the multi-trillion-dollar question.
See you tomorrow,
Allie Garfinkle X: @agarfinks Email: [email protected]
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Joey Abrams curated the deals section of today’s newsletter.
The post The cracks in venture are beginning to show, just as Anthropic gets ready to IPO appeared first on Fortune.
