Since the late 2000s, there has been a shift in VC investment away from hardware and energy towards service, software and infrastructure-oriented investments. On the right, we break out the Internet of Things sector by sub-segment and show the corresponding market size and projected growth.
The right chart shows the most common exit strategies: secondary buyouts, in which another sponsor purchases the target company; IPOs, in which the target company goes from private to public; and corporate acquisitions, in which another company purchases the target company. Recessionary and post-recessionary periods tend to be a suboptimal time to crystalize the most gains through an exit. However, as the cycle progresses, exits pick up, with corporate acquisitions being one of the most popular routes. In 2021, the strong equity market contributed to a surge in IPO exits.