IPO Mechanics & Lock-ups
An IPO is not an exit for a VC. It is just a financing event. The exit happens when the lock-up expires.
The 180-Day Lock-Up
When a startup goes public, VCs and founders sign a lock-up agreement preventing them from selling shares for 180 days. A GP cannot distribute cash to LPs during this time. They are entirely exposed to the public market volatility of the newly listed stock.
In-Kind Distributions
When the lock-up expires, GPs usually don't sell the stock and wire cash to LPs. Doing so would tank the stock price. Instead, they do an "in-kind distribution"—wiring the actual shares to the LP's brokerage account, forcing the LP to decide when to sell.