The conversation has moved from access and markups to liquidity, discipline and proof
By Darshan Honale | June 2026
I went into the California LP Summit expecting the usual mix of discussions around managers, sectors, co-investments and where capital is moving. All of that was there. But the question underneath many of the conversations was simpler: when does the capital come back?
That may sound obvious. Venture is supposed to generate returns. But for much of the last cycle, the industry could spend more time talking about access, top-quartile managers, paper marks and the next category than about actual distributions.
In 2026, LPs are much less patient with that distinction.
DPI has become a credibility question
The liquidity problem is not unique to venture. Across private markets, distributions have been weak relative to the prior decade. Bain’s 2026 private-equity report described distributions as stubbornly low even as deal and exit values improved. McKinsey similarly pointed to historically weak rolling DPI in buyout portfolios.
Venture has its own version of the problem. There are good companies in portfolios and there have been meaningful exits, especially around AI. But capital and liquidity are concentrated. A handful of very large financings or exits can make the headline numbers look healthier than the experience of the median manager or LP portfolio.
That changes the LP conversation. A manager can still have a compelling thesis, but the burden of proof is higher. How does the fund return capital? How much of the track record is realized? What is the expected duration? What happens if the IPO market stays selective? How dependent is the strategy on the next round being available at a higher price?
Access still matters, but it is not enough
One thing I heard repeatedly, in different forms, was that LPs still care about access. They want access to strong managers, unusual deal flow, co-investments and category-defining companies. Family offices in particular can move quickly when they see something they understand and want.
But access without underwriting discipline is less interesting than it was a few years ago.
This is important for emerging managers. The pitch cannot just be, “I know great founders” or “I have access to a network incumbents do not.” The question is what that access becomes. Does it improve entry price? Does it produce proprietary deals? Does it improve diligence? Does it help win allocation? Does the network create customers, talent, follow-on capital or better exits?
The network has to show up somewhere in the return model.
LPs are paying more attention to structure
The other part of the conversation is structure. Evergreen funds, secondaries, continuation vehicles, co-investments and other liquidity mechanisms are getting more attention because the traditional ten-year fund structure is being asked to operate in a market with longer company timelines and more uneven exits.
I do not think every venture fund needs to reinvent its legal structure. There are good reasons the standard model exists. But managers should understand that the structure itself is now part of the LP value proposition.
If two managers have comparable access and investment judgment, the one that communicates better, manages reserves more clearly, creates sensible co-investment opportunities, and thinks seriously about liquidity may be easier for an LP to underwrite.
The bar for emerging managers is different now
I still think there is room for emerging managers. In some ways, smaller funds can be better positioned because they can stay disciplined on ownership, entry stage and fund size. They do not need a multi-billion-dollar outcome in every company to move the fund.
But “small” is not a strategy either.
The manager needs to explain why the fund size matches the opportunity set, why the team has an edge that can survive competition, how portfolio construction reflects that edge, and what will be different about the next five years from the last five.
LPs are not asking for certainty. Venture does not offer it. They are asking for a more honest connection between thesis, fund construction, time, and realized outcomes.
Related: AI Is No Longer Just a Software Story.
The shift I would pay attention to
The private-markets conversation is becoming more practical. Less fascination with the idea of access by itself. More focus on how capital moves through the system.
That is healthy.
For GPs, it means fundraising will increasingly be tied to operating credibility: realized performance, portfolio construction, communication, reserves, follow-on discipline and a believable path to distributions.
For LPs, it probably means being more explicit about what they are optimizing for. Maximum upside? Earlier liquidity? Concentrated access? Broad diversification? Strategic co-investment? Those are different portfolios.
The interesting part of the California summit was not that LPs had suddenly become risk-averse. Many of them still want venture exposure. They are just asking harder questions about what they are actually being paid for.
Sources and notes
Bain & Company, Global Private Equity Report 2026: https://www.bain.com/insights/topics/global-private-equity-report/ – Private-market liquidity, exits and fundraising environment.
McKinsey, Global Private Markets Report 2026: https://www.mckinsey.com/industries/private-capital/our-insights/global-private-markets-report – DPI, holding periods, liquidity and LP priorities.
PitchBook-NVCA, Q1 2026 Venture Monitor webinar: https://pitchbook.com/webinars/q1-2026-pitchbook-nvca-venture-monitor-webinar – AI-driven concentration and uneven venture-market strength.