In a landscape where traditional initial public offerings (IPOs) are becoming increasingly rare, Forerunner Ventures' founder Kirsten Green is embracing the shift towards alternative exits and secondary markets. Speaking at TechCrunch's StrictlyVC evening, Green emphasized that the venture capital industry has adapted to this new reality, and her firm is no exception.

Forerunner Ventures, which has backed successful consumer startups like Warby Parker, Bonobos, and Glossier, has seen none of its portfolio companies go through a traditional IPO process. Instead, Warby Parker opted for a special purpose acquisition vehicle, Bonobos was acquired by Walmart, and Glossier remains privately held. However, Green doesn't view this as a failure, but rather a sign of the times.

In today's market, companies are waiting longer to go public, and the venture model is built around 10-year fund lifecycles. This means that startups need to reach a significant scale, often becoming double-digit billion-dollar companies, before they can stage a successful IPO. As a result, alternative exits, such as acquisitions and secondary market transactions, have become the new norm.

Green highlighted the success of Forerunner's portfolio companies, including fintech Chime and smart ring outfit Ōura, which have achieved valuations north of $5 billion. While Chime has confidentially filed to go public, Ōura's CEO has stated that there are no immediate plans for an IPO. Green expressed her confidence in Ōura's growth potential, emphasizing that Forerunner is focused on the company's long-term success rather than a quick exit.

The secondary market has become a crucial component of Forerunner's strategy, allowing the firm to manage liquidity and exposure. Green noted that the secondary market is "continuing to drive the industry" and enables "people to unlock returns and liquidity." This shift towards secondary markets has also led to more efficient price discovery, as more participants are involved in the process.

Green cited the example of Chime, whose valuation has fluctuated significantly over the years. From a $25 billion valuation in 2021 to a reported $6 billion valuation on the secondary market, and more recently, back up to $11 billion. She argued that the secondary market provides a more accurate reflection of a company's value, as it involves a larger number of participants setting the price.

Forerunner's strategy of partnering with startups early on gives the firm more flexibility and wiggle room than other venture capital firms. By identifying major shifts in consumer behavior and pairing them with emerging business models, Forerunner has been able to back successful companies like Bonobos, Glossier, and The Farmer's Dog, which sells gourmet dog food and is reportedly both profitable and seeing $1 billion in annualized revenue.

Green emphasized that great companies need time to develop, and not all growth paths look the same. Venture capital, once eager for exits, is learning to wait and, when necessary, to trade. As the industry continues to evolve, Forerunner Ventures is well-positioned to adapt and thrive in this new landscape.

Listen to the full conversation with Kirsten Green on the StrictlyVC Download podcast, available every Tuesday morning.