How pre-IPO risk compares with venture capital risk

By Unicorn Private Research. Published and last updated 25 September 2026.

Key takeaways

Venture capital and late-stage pre-IPO investing sit at opposite ends of the same asset class: venture funds companies that mostly fail, late-stage investing buys into companies that have already survived.
PitchBook measured company failure rates falling from 23.6% at Series A to 10.8% at Series E, on data as of 5 August 2021.
Buying only in established companies already valued above one billion dollars is a structurally different risk profile from early-stage venture, not a risk-free one.
A lower company failure rate is not the same as a lower investor loss rate: a secondary buyer pays a market price and carries entry-price risk that a primary investor does not.

Late-stage private companies fail less often than early-stage start-ups, and that difference is the whole basis of the distinction between venture capital and late-stage pre-IPO investing. A venture fund deliberately backs young companies in the expectation that most will return nothing and a few will return everything. A late-stage investor buys into companies that already have revenue, institutional governance and a valuation above one billion dollars, and so is exposed to a much narrower set of outcomes, both on the downside and on the upside.

What the failure data shows

The clearest published measurement of failure by financing stage comes from PitchBook, which measured company failure rates declining at every subsequent round. The figures below are company failure rates by financing round, on data as of 5 August 2021.

Financing round	Failure rate, company count	Failure rate, dollar basis
Series A	23.6%	16.1%
Series B	16.7%	12.5%
Series C	13.5%	9.8%
Series D	12.1%	9.6%
Series E	10.8%	7.7%

Industry Ventures reached the same conclusion from the other direction in February 2017, putting the early-stage loss rate at about 65% against less than 30% for later-stage companies. Correlation Ventures, writing on 13 July 2023, found that nearly half of all venture financings over the previous decade lost money for investors and that under 4% of invested capital returned ten times or more. Those figures describe the early-stage venture model, not the late-stage one.

Why the comparison is not the whole story

The failure figures above are real but they should be read with three qualifications, each of which cuts against reading them as a promise of safety.

The PitchBook data is an analyst note from December 2022 measured as of August 2021, and it predates the down-round and write-down cycle that followed. There is no equivalent refreshed table.
A company reaching a Series E has by definition already survived four earlier rounds, so part of the declining failure rate is selection rather than resilience.
Later-stage cohorts are younger and have had less time to fail, which mechanically flatters the late-stage figure.

What still goes wrong in a late-stage investment

A company that will almost certainly still exist in five years can still be a poor investment, and the risks that remain in late-stage pre-IPO are mostly about price, structure and time rather than about business failure.

Entry price. A secondary buyer pays a negotiated market price, not a primary round price. Forge measured its median secondary trade in August 2026 at a 3% discount to the last primary round, with the 25th percentile at a 30% discount and the 75th at an 11% premium, so the same company clears at very different prices depending on the seller.
Liquidity. There is no guarantee of an exit and no obligation on the company to provide one. FINRA lists the absence of a readily available secondary market as a principal risk.
Structure. Preferred shares carry liquidation preferences that can leave common stock worth far less than the headline valuation implies.
Dilution and time. A further round at a lower valuation reduces the value of an existing stake, and holding periods of several years are normal.
Transfer restrictions. The company can refuse to approve a transfer, which can void a transaction after it has been agreed.

How this shapes the way Unicorn Private invests

Unicorn Private acquires secondary stakes only in established, high-capitalisation private technology companies, the companies commonly called unicorns, and does not invest in early-stage start-ups. That is a deliberate choice about where in the risk curve to operate: it gives up the possibility of a hundredfold return on a seed position in exchange for a far lower rate of outright business failure, a company with audited financials and institutional investors already on the register, and a visible path to an exit. It does not remove the risks listed above, and nothing on this site should be read as a promise of return.

The short answer

Late-stage pre-IPO and venture capital are not the same risk. On the published data, companies fail progressively less often at each successive financing round, and by the late stage the failure rate is roughly half the Series A rate. What a late-stage investor takes on instead is price risk, illiquidity and time, which are managed through due diligence, entry discipline and holding period rather than through diversification across a portfolio of expected write-offs.