Thirteen years ago, Forerunner Ventures started a new era of consumer startups, including notable companies like Warby Parker, Bonobos, and Glossier. Interestingly, none of these companies have followed the traditional IPO process. Warby Parker, for instance, went public through a special purpose acquisition vehicle, while Bonobos was acquired by Walmart. Glossier, on the other hand, remains privately held, alongside many other design-driven brands in Forerunner’s portfolio.

According to Forerunner founder Kirsten Green, this is not a cause for concern. In today’s landscape, alternative routes to the traditional IPO have become the norm, and this shift is largely driven by the changing needs and priorities of companies and investors alike.

Consider companies like Chime and Ōura, which were early investments for Forerunner and have achieved significant valuations, surpassing $5 billion. While Chime has filed to go public, Ōura’s CEO has stated that there are no immediate plans for an IPO. This highlights the varying paths that companies can take, and how traditional IPOs are no longer the only option.

At a recent TechCrunch StrictlyVC evening, Green expressed her indifference to Ōura’s decision, describing the company as “off-the-charts phenomenal” and emphasizing that Forerunner is focused on the growth and potential of its portfolio companies, rather than rushing towards an exit.

Green noted that investors have adapted to a world with fewer traditional public offerings by increasingly turning to the secondary market to manage liquidity and exposure. This shift is driven by the need for companies to achieve significant scale before going public, which can take time.

“We’re engaged in the secondary market, buying and selling,” Green explained, characterizing the shift as both practical and strategic. “Companies are waiting longer to go public, and the venture model is generally based on 10-year fund lifecycles. If you need to be a double-digit billion-dollar company to stage a successful IPO, it takes time to get there.” The secondary market allows companies to unlock returns and liquidity, driving the industry forward.

This shift is remarkable, as it marks a significant departure from the past, where firms could expect a major liquidity event within a few years. The growing reliance on the secondary market is not just a response to public markets favoring scale and high-performing companies but also reflects the changing needs of investors and companies.

Another significant benefit of the secondary market, according to Green, is that price discovery becomes more efficient with more participants involved. This can lead to more accurate valuations, even if it means a discount on one of her deals.

Green cited Chime, the neobank that became a household name during the fintech boom, as an example. Its valuation has fluctuated wildly, from $25 billion in 2021 to $6 billion on the secondary market, and recently climbed to $11 billion. “In terms of prices, if you think about it, the round that gets done, the Series D, that was a negotiation between the company and an investor. With the secondary market, you’ve got more people in the mix, right? And then when you eventually go to the public markets, you’ve got everybody” setting the price for what they perceive to be the value of a company.

Green’s firm can afford to be less invested in later valuations due to its strategy of partnering with startups early on. This approach gives Forerunner more wiggle room than other venture firms might enjoy. “We try to be early,” Green said, pointing to the firm’s framework of identifying major shifts in consumer behavior and pairing them with emerging business models.

This strategy has worked in the past, with companies like Bonobos and Glossier riding the mobile-social wave to success. It has also worked with subscription-first plays like The Farmer’s Dog, which sells gourmet dog food and is reportedly both profitable and seeing $1 billion in annualized revenue. Forerunner is betting on this approach again, focusing on the intersection of invention and culture.

Great companies need time to develop, and not all growth paths look the same. Venture capital is learning to wait and, when necessary, to trade. This shift in approach reflects the changing landscape of the industry and the need for companies to prioritize growth and innovation over traditional exit strategies.

(You can listen to our conversation with Green from this same sit-down right here, via the StrictlyVC Download podcast; new episodes are published each Tuesday morning.)