The CEE venture capital market is entering a new phase. Many funds are approaching the end of their 10-year cycles, and conversations across the ecosystem are shifting from the growth-at-all-costs strategies to a simpler question: where is the liquidity?
During the zero-interest-rate boom of 2021 and 2022, VC firms across Europe and the US created paper unicorns at a record pace. Startup valuations soared, fund NAVs expanded, and TVPI figures looked increasingly impressive on paper. But when the market corrected and the IPO window closed, those headline numbers lost much of their meaning. Today, LPs seem to be less interested in theoretical portfolio value and much more focused on distributions and actual cash returns.
At a recent CEE VC Summit, partners from J&T Ventures, Orbit Capital, BrightCap Ventures, Credo Ventures, and Kibo Ventures discussed a pressing challenge for today’s investors: how do you turn a paper unicorn into real DPI in a market with limited exit opportunities? Here are five takeaways from the panel.
1. Great venture outcomes require both patience and liquidity discipline
One of the recurring themes in the VC discussions is deciding when to sell part of a breakout startup without giving up too much upside — especially when the company starts performing far beyond initial expectations.
Maciej Gnutek from Credo Ventures described his firm’s approach, honed through its early backing of UiPath and recently applied to AI powerhouse ElevenLabs. They use a simple internal heuristic: if selling roughly 30% of a position can return the entire fund, the firm will sell. The goal is not to exit completely, but to reduce concentration risk while still preserving exposure to further upside. During Credo's journey with ElevenLabs, the firm executed its first secondary sale when the company reached a multi-billion-dollar valuation, and it was enough to return the fund 1x gross.
But it’s just one part of the equation — the panel did not frame secondary selling as an automatic rule. Investors argued the opposite point as well: many of the best venture outcomes come from holding exceptional companies longer than feels comfortable. The balance is the key issue here - securing enough DPI to de-risk the fund and allow it to maintain the exposure to some genuine outliers.
2. The secondary market has become more structured and institutionalised
Several investors noted that the secondary market looks very different today than it did during the worst part of the recent downturn. During 2022 and 2023, even winning companies struggled to generate secondary demand, and discounts to their previous funding rounds sometimes reached 40% or 50%. In many cases, buyers demanded much lower prices, citing “purchasing illiquid common shares with limited information access”.
These days, conditions have improved significantly, as more startups organise structured, company-led secondary rounds. These processes typically include formal data rooms, coordinated investor communication, and clearer strategic positioning around the company’s next phase of growth. It reduces some of the adverse-selection concerns that historically shaped the secondary market. It also creates controlled liquidity opportunities for employees and early investors without destabilising the cap table.
The panelists also drew an important distinction between two different types of discounts: broad market illiquidity discounts and share-class discounts tied to differences between common and preferred equity.
Even in healthier markets, secondary buyers will usually pay less for common shares because of the lack of protections attached to preferred stock. But panelists argued that these discounts are often much smaller than the distressed pricing seen during the VC downturn.
3. Information access becomes a strategic advantage as companies mature
Patience in the VC process can only work if investors actually retain access to relevant information on their startup’s trajectory. As startups scale and raise successive rounds from mega-funds, early-stage seed investors are routinely pushed off the board cap table. This creates a difficult problem for fund managers deciding whether to hold or sell mature positions. Without reliable information, investors risk making liquidity decisions largely in the dark.
The emphasis on information is also relevant when discussing valuations. Historically, many venture firms relied heavily on the “last-round valuation” approach, using the most recent financing round as the primary benchmark for portfolio marks. But that framework breaks down when strong companies stop fundraising for long periods while continuing to grow rapidly.
Javier Torremocha from Kibo Ventures described a case where a portfolio company scaled from roughly €20 million to €100 million in revenue without raising external capital, meaning that the last-round methodology no longer reflected the economic reality of the business. In response, Kibo Ventures introduced a more accurate valuation process, incorporating transaction multiples, public comparables, investment bank analyses, and input from other investors around the table.
4. Capital-efficient companies create more exit flexibility
The panel also explored whether the market has fallen into a “valuation trap,” where startups raise capital at prices that later become difficult to justify in acquisition or secondary scenarios. Elina Halatcheva from BrightCap Ventures pointed out that CEE founders are inherently wired to do more with less. Citing a McKinsey study, she noted that CEE startups generate up to five times more revenue per dollar raised than their American peers. By raising smaller rounds and spending efficiently, these companies avoid bloated valuations — strategic acquisitions remain financially realistic, whilst secondary buyers can still achieve acceptable returns.
BrightCap also stressed the importance of investing early, not chasing expensive late-stage rounds, and rather backing companies before valuations can become disconnected from business fundamentals.
This matters because even strong startups can become difficult to exit when too much capital has been deployed at inflated valuations. In such cases, investor return expectations may exceed what potential acquirers or secondary buyers are actually willing to pay.
5. Fund structure increasingly determines liquidity strategy
One of the clearest themes from the panel was that liquidity is closely tied to fund construction. The traditional ten-year venture model is being challenged as the best companies are staying private for longer, and at the same time, LPs are pushing for more consistent distributions. This dynamic creates structural tension for early-stage firms holding large positions in mature private companies.
Several panelists explained how their funds are adapting to this shift by becoming more flexible in their approach. Rather than locking up LP capital for extended periods, they are using tools such as SPVs, continuation vehicles, and structured secondary sales to maintain exposure to high-performing companies while still providing liquidity.
The discussion also highlighted that fund size itself plays an important role. Credo Ventures served as an example of a relatively small core fund - one that requires lower absolute exit values to generate strong returns and allows firms to remain more concentrated in early-stage investing. Instead of reserving large amounts of capital for follow-ons, Credo frequently uses SPVs to increase exposure to breakout winners outside the main fund structure.
The panel also acknowledged that many firms now think differently about the speed of investing. During the overheated years of 2021-2022, some managers deliberately slowed investment activity rather than forcing capital into inflated markets. Others accelerated investments when they believed major shifts like generative AI were creating rare opportunities.
The broader point was that venture returns today depend on much more than simply backing good founders. Liquidity timing, fund pacing, ownership management, and secondary strategy now play a much larger role in determining realised returns.
