The startup alphabet used to feel shorter.
A seed round. A Series A. Maybe a B. If things went well, an acquisition or IPO a few years later.
That was the implicit bargain behind a lot of early-stage investing: take real risk early, wait 5 to 7 years, and if you backed the right company, liquidity would eventually show up.
Today, the alphabet keeps going.
Series C.
Series D.
Series E.
Series F.
Series G...
Each new letter looks like progress. Bigger round. Higher valuation. Stronger headline. More proof that the company is "winning."
But for many angels, early funds, employees, and LPs, one basic question keeps getting pushed further out:
When does any of this turn into actual cash?
That is the real shift in venture right now. Private markets solved fundraising. They did not solve liquidity.
The old venture bargain is breaking
For a long time, venture worked because the timeline roughly matched the promise.
Early investors accepted that most startups would fail. In return, the winners were supposed to exit within a timeframe that made the risk and illiquidity worth it. A fund could return capital, LPs could recycle it into the next vintage, founders could deliver an outcome, and employees could finally convert years of paper upside into something real.
That loop is much less reliable now.
We still have fundraising. We still have markups. We still have ever-larger private rounds.
What we do not have enough of is distribution.
And in venture, that distinction matters more than almost anything else.
A markup is a story.
DPI is cash.
Why the alphabet got longer
The most obvious reason is also the simplest: companies no longer need public markets as early as they used to.
There is more late-stage private capital. More crossover capital. More investors willing to fund the next round and postpone the harder conversation. If public multiples are weak, stay private. If the IPO window is shut, stay private. If M&A is slow, raise again and buy more time.
From a company's point of view, this can be rational. Why expose yourself to quarterly scrutiny, regulatory burden, and public market volatility if private investors are still willing to write the check?
The problem is that what is rational for the company is not always healthy for the ecosystem.
Because every time a company delays the exit decision with another round, someone else absorbs the duration risk. Usually that means the earliest investors. Often it means employees. Eventually it means the LPs who are waiting for funds to generate real distributions, not just marked-up portfolios.
The startup alphabet got longer not because the business fundamentally needed more private life, but because the market made postponement easier.
Paper wealth is not the same as a return
This is where the venture conversation often gets fuzzy.
A company raises at a higher valuation and everyone says value has been created. Sometimes that is true. But a higher private round is not the same thing as liquidity. It is not the same thing as realized return. And it is not the same thing as money back in the bank.
Carta's 2024 analysis of venture fund performance had one of the clearest data points on this. Among 2017 vintage funds, 25% had generated any DPI after three years. Among 2021 vintages: just 9%.
After five years, 59% of 2017 funds had begun generating DPI. For 2019 vintages, only 39%.
That means more than three out of every five VC funds that closed in 2019 had not returned any capital to their LPs after five years.
Funds are aging. Portfolios are getting marked. Headlines keep getting written. But distributions are taking longer to show up.
PitchBook has been making this point from another angle: venture net cash flow has remained negative for years, and the industry's liquidity crisis has persisted even while pockets of dealmaking recovered.
The system still knows how to price optimism. It is much less effective at returning capital.
When the system works, you notice
This is not to say exits never happen. When they do, the math is spectacular.
Google's $32 billion acquisition of Wiz is a clear example. In that deal, Cyberstarts turned a seed investment into roughly $1.3 billion — a 320x return. Later-stage investors locked in strong multiples too. Employees got real liquidity. LPs got real distributions.
I wrote a detailed breakdown of the VC math behind that deal and the CISO network flywheel that powered Wiz's growth. If you are interested in what happens when an exit actually materializes, it is worth reading: https://medium.com/@emretezisci/decoding-googles-32-billion-wiz-bet-cloud-security-leadership-ciso-networks-and-the-vc-c40dbaa0ec2c
But the Wiz outcome stands out precisely because it is rare. For every company that exits at $32 billion, there are hundreds still at Series E, F, or G with no IPO on the horizon and no acquirer at the table.
That is the gap. We celebrate the exits that happen. We do not talk enough about the ones that don't.
Secondaries are not a sideshow anymore
One of the clearest signals that this is real is the rise of secondaries.
For years, secondaries felt like a niche corner of private markets. Now they look more like a pressure-release valve.
PitchBook reported that direct VC secondaries reached $14.7 billion in 2024, the strongest annual total since 2021. Secondaries grew from 1.3% of global VC exit value in 2021 to 4.2% in 2024. That is not a random side trend. It is the market inventing a workaround for exits that are not happening fast enough.
Employees want liquidity. Early investors want liquidity. LPs need liquidity.
If IPOs and M&A are not providing it, the secondary market will.
A robust secondary market should be a complement to venture. It should not become the default answer to the question: "How does anyone actually get paid here?"
Who pays the price for the extra letters
Founders often benefit from the longer alphabet. More capital. More time. More optionality. That is understandable.
But not everyone is positioned the same way.
Angels may wait far longer than expected for a meaningful realization. Small early-stage funds can end up holding impressive logos with very little DPI. Employees can spend a decade accumulating equity in companies that look successful but remain stubbornly illiquid. LPs can find themselves overallocated to venture simply because distributions did not come back on schedule.
That last point matters more than people admit. Venture depends on recycling. When LPs get distributions, they can recommit. When they do not, the entire fundraising environment tightens.
So this is not just about startup vanity metrics or late-stage excess.
It is about what happens when an ecosystem stretches its timelines without redesigning its liquidity mechanics.
The takeaway
Staying private longer is not automatically bad.
Some companies genuinely should stay private longer. Some public listings happened too early. Some secondaries are a sign of a healthier, more flexible market.
But the current system has a structural imbalance.
We made it much easier to raise another round.
We did not make it equally easy to return capital.
And that is why the alphabet keeps going.
A, B, C, D, E, F, G...
More rounds. More time. More paper value. And often, a longer wait for everyone who funded the story early.
The startup alphabet got longer.
The payout timeline did too.
And if venture wants to keep calling itself a return business, not just a valuation business, that gap has to matter again.