The Exit Bottleneck: Will the Doors Reopen in 2025?

The Exit Bottleneck: Will the Doors Reopen in 2025?

Since we began our investment strategies more than a decade ago, Blockchain Coinvestors is fortunate to have invested in more than 110 blockchain unicorns both through our indirect investment strategies and from direct follow-on investments. In this week’s Letter from London, we take a look at how large exits drive the exceptional returns of early-stage venture capital investors, and how a backlog of blockchain unicorns is about to gain access to public markets through various going public strategies – IPO’s, DeSPAC mergers, reverse shell mergers, and perhaps direct listings.

To learn more about the current market dynamics contact us at IR@BlockchainCoinvestors.com.

Power Curve Means Large Exits Drive Exceptional Returns

For venture investors, exits are the lifeblood of the innovation economy and the driver of their returns. They provide the liquidity necessary to return capital to limited partners, who, in turn, re-up into new funds that fuel the next wave of founders and ideas. When exit markets close, the entire venture flywheel slows.

The statistics gathered over the last thirty years show a consistent pattern for technology focused venture capital. Most successful exits (90% and higher) are acquisitions of a portfolio company by a larger corporation. Only about 10% of successful exits are going public events, however, they tend to be the largest (and longest awaited) exits which has significant impact on venture returns.

The importance of this cannot be overemphasized. Exhibit 1 shows how venture is a power curve with a small number of exits driving most of the returns that a typical venture investor receives on the funds that they have invested. In practice, research shows that 80 or more of the capital many funds distribute to their Limited Partners comes from the 10% or so of outcomes that return 5x or better.

Exhibit 1: VC Exceptional Returns Driven by Large Exits

So mega acquisitions and going public events are the drivers of the superior expected returns of early-stage venture capital top decile funds, even though they are rare events.

In blockchain we have endured a number of years of a near-frozen going public and M&A market. After the SPAC frenzy and near-zero interest rates of 2020–2021, the return to higher rates, regulatory pushback, and geopolitical headwinds have left the exit landscape barren.

But in early 2025, something is changing for the better.

Blockchain and Crypto M&A Awakens

In the last few weeks, everything has begun to change with regard to blockchain M&A.

Kraken’s acquisition of Ninja Trader for $ 1.5bn, Ripple’s acquisition of Hidden Road for $ 1.25bn and Stripe’s acquisition of Bridge for $1.1bn are all examples of a new phase of mega acquisitions within the blockchain and crypto sector.

Under the prior US administration, large scale blockchain acquisitions were hard to contemplate. Boards of Directors at potential acquirors, both traditional and blockchain based, had a hard time approving acquisitions in the hundreds of millions or more, in an environment of legislative uncertainty or outright hostility. So, in practice, mega acquisitions were not a part of the last four years in the blockchain space.

As noted above, mega acquisitions drive exceptional returns for the venture capitalists which backed the acquired company, however, it is the other side of the exit slate – going public events – that not only capture the imagination of the media but also when they occur, can create truly superior returns for a venture fund.

And hereto, we are seeing things changing for the better.

Cracks in the 'Going Public' Ice

The first quarter of 2025 brought long-awaited signs of life. The IPO window, shut tight for nearly three years, began to creak open. The U.S. led the charge with a flurry of public listings, while Europe and India remained steady, and even Asia-Pacific began rebounding.

In fact, Q1 2025 was the strongest first quarter for IPOs since 2015 (excluding the 2021 boom), with a diverse mix of listings and improved investor appetite. CoreWeave’s IPO in March—while downsized from its original target—still raised $1.5 billion and valued the AI infrastructure firm at $23 billion. It marked a key moment for broader tech markets, signaling that public investors were ready to lean in—albeit cautiously. Exhibit 2 demonstrates this awakening IPO market.

Exhibit 2: Awakening IPO Market

In blockchain, public filings from Circle, eToro and Galaxy Digital suggested a wave of digital asset IPOs was imminent. Bullish, Gemini and Kraken also announced intentions to go public.

The narrative is clear: public markets are no longer off-limits to blockchain.

Trade Wars Reignite Market Jitters

Yet, just as momentum was building, there was an unfortunate geopolitical shock.

The newly inaugurated U.S. administration reignited tariff tensions, triggering global market volatility. IPOs are notoriously difficult in periods of market volatility, as public market investors struggle to price assets. Similarly, M&A deals are often put on hold when the regulatory landscape remains unclear. The tariff war thus fostered the dual problem of uncertainty and liquidity, which quickly impacted the IPO and M&A markets.

Notable tech IPO hopefuls Klarna and StubHub—having recently filed to go public—shelved their plans amid the turmoil.

Circle, one of the most prominent stablecoin issuers, postponed its IPO, citing market instability.

The message is stark: this market is still fragile. Confidence can be shaken overnight. However, the backlog of highly valued technology companies with going public aspirations can’t be blocked forever. The pressure is building, and we expect it will be released in 2025 and 2026.

The Pressure Cooker: A Growing Backlog

The private markets are bloated with unicorns—more than 700 in the U.S. alone—and just 15 achieved a liquidity event in the last year. About 40% of American unicorns are now over nine years old, far beyond the traditional VC holding period. Exhibit 3 shows this graphically by industry. Our own Meet the Blockchain Unicorns report provides the details of the couple of hundred and growing blockchain unicorns including the over 100 that we are invested in.

Exhibit 3: VC Exceptional Returns Driven by Large Exits

With the backlog growing – not just in tech but across sectors – fund managers are unable to recycle capital. Limited partners grow increasingly restless. The ripple effect slows new fund formation and limits startup funding.

Innovation, in short, gets starved.

SPACs: Quietly Back in Play

Enter SPACs—not with the fanfare of 2021, but as a necessary release valve. For many blockchain and crypto firms still sidelined by traditional IPO routes, SPACs remain a viable and sometimes essential path.

Coincheck’s successful SPAC merger in 2024 made it just the second crypto exchange to list publicly in the U.S., after Coinbase. More strikingly: since 2024, more blockchain companies have reached public markets through SPACs than IPOs. The stigma may remain—but so does the utility.

In fact, as Exhibit 4 demonstrates, since 2024 more tech and blockchain companies have achieved public listings in the US via SPAC than the traditional IPO route.

Exhibit 4: VC Exceptional Returns Driven by Large Exits

Source: Dealogic, SPACResearch as of 4/6/25

London’s View: A Backlog Poised to Burst

The view from London is clear: the pipeline is massive, and demand is building. PwC reports that the U.S. alone has hundreds of billion-dollar startups poised for exit. When volatility eases, we expect a surge—not a trickle—of IPOs, DeSPAC mergers, reserve shell mergers, and of course, mergers and acquisitions.

But a full reopening of the exit window will require more than market readiness—it will demand macroeconomic stability and de-escalation on the trade front.

The exit market isn’t just a scoreboard for Wall Street or venture capitalists. It’s the engine room of innovation. When exits flow, capital recycles, new funds are raised, and bold ideas are funded. The ecosystem thrives.

After three years in the doldrums, the venture market is hungry for movement. The green shoots are real. But geopolitical risk, policy uncertainty, and investor caution mean we’re not out of the woods.

The next phase will require more than optimism—it will require strategy, timing, and clear eyes.

We’re watching closely and helping our blockchain portfolio companies get access to the support they need whatever their preferred exit path is.

Thank you for reading,

Mitchell Mechigian

Partner, London

About Blockchain Coinvestors

Blockchain Coinvestors invests in blockchain businesses. Our vision is that digital monies, commodities, and assets are inevitable and all of the world’s financial infrastructure must be upgraded. Our mission is to provide broad coverage of early stage blockchain investments and access to emerging blockchain unicorns. Blockchain Coinvestors’ investment strategies are now in their 12th year and to date we have invested in a combined portfolio of 1,250 blockchain companies and projects including more than 110 blockchain unicorns. Visit us at www.BlockchainCoinvestors.com to learn more.

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