An insightful and numbers-full piece in, of all places, Pensions and Investments, discusses the traffic jam developing in Venture Capital. As with any other backup, there is an excess at the beginning and less near than the end: as total capital invested continues to rise (more dollars but a smaller number of deals), however there are fewer exits, as market reluctance remains intact and IPOs sit perpetually on the horizon with liquidity always a destination, but too rarely an visit.

The piece points out that, like a long line of mega-size SUVs idling in traffic with their large engines rumbling, 40% of the $19 billion of capital invested was with deal sizes of $100 million or more — hardly the smaller checks to nimble upstarts that venture capital has long mythologized. Part of this stall is the entry of institutional funds (such as Vanguard and T.Rowe Price) that have simply crossed the velvet rope to the other side of the IPO line: better to be in the elite club that can buy privately a few quarters before a company goes public than at the offering price with the rest of the retail rabble.

While there is some advantage to the surge in larger, later-stage investments — among them a more robust secondary market, allowing early investors and employees to manage risk rather than wait through a lockup period after a public offering — there is plenty of danger. Like any other investment, venture depends on eventual liquidity, and the exit offramp is currently a slow single lane peeling off from the autobahn: on target for 707 exits for the year, a drop of about 16% from the previous year’s already tight market. As the accompanying chart shows, the performance of VC funds (by vintage) is starting to flatten out, with median returns from 2012-2014 edging towards the single digits. With so many venture-backed cars lined up on the highway, at some point the ones at the end of the line are going to have to turn around, give up on liquidity altogether, and settle in at home.