Macroeconomic activity and geopolitical tensions have made for an uncertain global venture capital climate in recent months. Amid clogged IPO pipelines and a liquidity crunch, some venture capitalists are shifting focus to acquisitions and regional markets to find exit opportunities and sustain returns.
VCs are looking to regional and acquisition markets amid a slowdown in IPOs.
The venture capitalist market has been under pressure recently after several high-profile companies paused their IPO plans amid growing market uncertainty.
Buy now, pay later leader Klarna and ticketing platform StubHub were both preparing to go public in the near future, but have since hit pause on their launches. The IPO clog is creating a liquidity crunch among VC firms, causing some investors to look elsewhere.
“There are signs of life, certainly in the acquisition market — we are seeing really cool things happen,” Aidan Madigan-Curtis, a General Partner at Eclipse Ventures, told the audience at Fortune’s Most Powerful Women Summit in Riyadh.
Madigan-Curtis cited OpenAI’s recent deal to buy AI coding startup Windsurf for $3 billion as an example.
“Some of these mega players that have stayed private and are getting built up and bid up and who knows what the exit strategy looks for those guys in the long run, but probably at some point they’ll need to IPO. But the IPO is just behemoths in their space, and they are creating almost these mini-ecosystems where they’re doing more acquisitive activity and creating some really kind of neat, fast-paced high RR exits,” she said.
Others are looking to more regional markets for signs of life.
“The regional IPO markets have never been stronger or better,” Noor Sweid, Founder and Managing Partner at Global Ventures, said. “We had a 30% growth in regional IPOs last year.”
Venture capital investment in the Middle East and North Africa surged in the first quarter of this year, with startups in the region raising $678 million, per Bloomberg. The surge makes it the region’s strongest quarter since the end of 2023.
Saudi Arabia was in the top spot for MENA investment and ranked first globally among emerging markets, according to data from Magnitt.
VC market under pressure
The VC market has also suffered from the economic disruption of Trump’s global tariffs.
Market chaos caused the sweeping tariffs to dash hopes for a venture capital rebound in 2025. Trump’s tariffs exacerbated existing challenges in the VC market, according to PitchBook, especially as IPO pipelines remain clogged and liquidity scarce.
Despite strong demand for AI, which, according to PitchBook, attracted over 70% of U.S. VC funding in Q1 2025, supply chain disruptions exacerbated by the tariffs may also dampen investor appetite, particularly in hardware-dependent sectors like AI infrastructure.
Industry leaders previously told Fortune that tariffs could prolong market stagnation, delay innovation cycles, and extend the current liquidity crunch across the VC ecosystem.
This story was originally featured on Fortune.com
