On YC startup exits (2025 update)

One of the questions I’m asked most often by Rebel Fund LPs is “How long will it take to get my money back?”

I get it — venture is an illiquid asset class with long holding periods, and especially with the recent slowdown in IPO and acquisition activity, DPI is top-of-mind for many venture investors.

A couple of years ago, I wrote a blog post On YC startup exits that attempted to answer that question statistically. Rebel has improved our data infrastructure dramatically since then, allowing us to answer this with even more nuance, so I figured now is a good time for an update.

As my long-time readers know, Rebel maintains the most comprehensive dataset that exists of YC startups outside of YC itself, now with millions of datapoints across every YC founder and company in history, including the outcomes of every exited company (exit type, exit year, estimated valuation, etc). We use this data primarily to train our proprietary Rebel Theorem 3.0 machine learning algorithm, but it’s also useful for tracking interesting trends in the YC startup ecosystem.

So, I queried our database for every exited YC startup to date, excluding those with very small outcomes for early investors (<10% IRR) to remove the acqui-hires, leaving me with ~250 ‘real’ exits to analyze. As I mentioned in my popular post On the life and death of Y Combinator startups, about ~40% of YC startups ultimately achieve an exit, so these ~250 companies are a small fraction of the thousands of YC startups that will eventually be acquired or go public.

The first thing I found is the median time it takes for a YC startup to achieve an exit is about 5 years, but not all exits are created equal. As you’ll see in the chart below, the <$100M exits take only about 3 years, the $100M-$999M exits take closer to 6 years, and the $1B+ exits take over a decade!

The reason the overall median time to exit is just 5 years is the smaller exits are much more common:

In my post On the power law of Y Combinator startups, I spoke about how incredibly skewed startup investor returns are towards the big winners, and we see this when looking at exited startups as well. Even though the unicorns are just ~8% of all exits, they represent a whopping ~93% of the cash returned to YC startup seed investors:

Predictably, the IRR enjoyed by seed investors in companies achieving these larger exits is much higher, hitting 75% IRR for the unicorns, which is of course insanely good:

Many investors have felt the pace of startup exits has slowed recently, and we see this reflected in our data as well. After the craziness of the 2021 ZIRP-era peak, YC exits have been slower in recent years than as far back as 2017, despite steadily growing batch sizes:

We also found that median exit times vary quite a bit by technology sector, with Industrials, Consumer, and B2B companies achieving quicker exits, and Healthcare companies taking the longest:

So what does all this mean for early-stage startup investors? Here’s my take:

• Power-law is real — Investors looking for DPI should follow the same strategies as those seeking IRR, which I speak to in my power law post
• Be patient, my friends — The best exits take the longest and drive the vast majority of cash returns, so ride your winners all the way
• Keep a balanced diet — Invest in a wide variety of sectors to cover all your bases. B2B companies exit more quickly and often, Fintech companies post the highest IRR, Consumer companies drive the most exit dollars but are riskier, etc.
• Don’t try to time the market — Nobody knows what the IPO market will look like a decade from now when today’s best seed investments are exiting, nor when the next 2021-style liquidity bonanza will hit, so just keep making startup investments year after year
• Don’t discount unrealized IRR — I know you can’t buy beer or yachts with unrealized returns, but they definitely still ‘count’ in an asset class like venture with very long liquidity timelines, and are useful for tracking portfolio performance along the way

As always, I hope you guys found this helpful. Best of luck investing in tomorrow’s 10+ year overnight successes!