AI IPOs Could End a $169 Billion LP Liquidity Crisis – But Gains May Flow to the Biggest VC Firms

Quick Facts

• Net cash flows to LPs have been negative by $169 billion since 2022, per PitchBook-NVCA data.
• Cerebras Systems raised $5.55 billion at a $56.43 billion valuation — the largest AI IPO on record.
• The 10 largest U.S. venture funds captured nearly one-third of all capital raised in 2025, per the NVCA.

A wave of major AI IPOs is poised to break a multi-year liquidity crisis in venture capital. But the distribution of that capital may not be equal. According to Andrew Gershfeld, General Partner at Flint Capital, the real story is not the IPOs themselves — it is what limited partners do with the money they get back.

LP distributions fell to roughly 6% of assets under management in the first half of 2025, according to McKinsey. The 10-year average is closer to 14%. That gap represents tens of billions of dollars in delayed payouts to pension funds, university endowments, sovereign wealth funds, and family offices.

The numbers behind the drought are severe. Since 2022, net cash flows to LPs have been negative by $169 billion. The average hold period for venture-backed companies stretched from 4.5 years to over 7 years as the IPO market froze between 2022 and 2024. An analysis of 17,000 funds found that 70% of venture funds extended beyond their initial 10-year terms. Stakes in those funds changed hands at discounts of 40% to 60% in late 2024 and into 2025.

The IPOs That Could Crack the Dam

CoreWeave went public on March 28, 2025, at $40 per share. The stock was trading around $139 within five months, a roughly 250% return. Seed investors saw returns of up to 800x. As the lock-up period expired, Morgan Stanley, JPMorgan Chase, and Goldman Sachs arranged more than $1 billion in block trades as early investors sold shares.

Cerebras Systems followed with the largest AI IPO on record. The chip company priced at $185 per share, raising $5.55 billion at a fully diluted valuation of $56.43 billion. The offering was oversubscribed roughly 20 times. Cerebras reported $510 million in revenue for 2025, up 76% year-over-year, and swung to $237.8 million in net income from a net loss of $481.6 million the prior year. Its lock-up expires around mid-November 2026.

SpaceX went public at a $1.77 trillion valuation, raising $75 billion — the largest IPO ever for a venture-backed company. The listing moved markets, but more than $300 billion in unreturned capital remains tied up in private funds.

The Pipeline and the Concentration Problem

Five private companies — SpaceX, OpenAI, Anthropic, Stripe, and Databricks — collectively carry more than $3 trillion in private market value. OpenAI filed confidentially for an IPO in June 2026, targeting a listing approaching a $1 trillion valuation, though it is now weighing a delay into 2027. Anthropic filed one week earlier on June 1, 2026, and is still tracking toward a late-2026 debut after raising private funding at a $965 billion valuation. Databricks crossed $5.4 billion in annualized revenue with a net retention rate above 140%.

The concern Gershfeld raises is where the returned capital goes. When LPs receive distributions, they rebalance portfolios and evaluate new fund commitments. The research suggests they tend to recommit to the largest, most established managers first.

The data supports that concern. The 10 largest U.S. venture funds captured nearly one-third of all capital raised in 2025, while first-time fund formation fell to its lowest level in more than a decade. Andreessen Horowitz alone raised over $15 billion across five funds, more than 18% of all U.S. venture capital raised during the year.

For founders, the implication is direct. A concentration of LP capital in a handful of mega-funds shapes which startups get funded, at what valuations, and on what terms. Liquidity returning to the market is a positive signal. Where that liquidity lands determines what comes next for the broader startup economy.

Read more: The Biggest Consequence Of An AI IPO Isn’t The IPO Itself. It’s What Happens Afterward.