Pre-IPO vs IPO: Which stage is more profitable? In-depth analysis of the latest data in 2026

On June 5, 2025, stablecoin issuer Circle officially debuted on the New York Stock Exchange. In just two trading days, its stock price surged from an offering price of $31 to $107.7, a cumulative increase of 247%. However, the real winners were the institutions that entered as early investors in 2018—they reaped returns several times or even dozens of times their initial investment as the company went public. Meanwhile, investors who entered the secondary market on the IPO day already faced a huge gap in entry costs compared to early investors.

This case clearly highlights the profit gap between Pre-IPO and IPO. Pre-IPO vs. IPO: Which stage is more profitable?

Return Rate Data: Three Distinct Layers of Returns

A research report on IPOs of emerging companies points out that the average return rate for Pre-IPO investors is about 43%, while the profit ratio for IPO-stage investors is only 36%, further dropping to 32% in the Post-IPO stage. The gradient of returns across the three layers is clear—the earlier you enter, the higher the success rate.

Macro data also confirms this trend. According to S&P Global, the average first-day return for U.S. IPOs in the first half of 2025 was 15.3%, significantly higher than the 10.5% in the same period of 2024. So far in 2025, the U.S. IPO market has completed 168 transactions, raising nearly $28.9 billion, the highest level since 2021. However, the first-day gain itself illustrates the other side of the issue: there is a significant "valuation jump" on the IPO day, and for investors who missed the Pre-IPO round, this excess return is essentially unattainable.

Looking at specific cases, Cerebras opened Pre-IPO share subscriptions at a subscription price of $100.35 in March 2026, then successfully listed on Nasdaq. The comprehensive return rate for participating users on the first day of listing once exceeded 300%. In June of the same year, AI giant Anthropic officially submitted its IPO registration statement to the SEC. By then, the book return for early-stage venture capital firms was already about 8 times their total investment.

Why Are Pre-IPO Returns Higher?

Understanding the return difference between Pre-IPO and IPO requires revisiting the valuation logic itself.

First, the "conservative pricing" strategy of underwriters creates price differentials. In the traditional IPO process, underwriters usually adopt a conservative pricing strategy for the offering price to leave room for gains on the first day of listing. This strategy ensures a successful listing while objectively creating a price gap between the offering price and the fair market value—this is precisely the profit range that Pre-IPO investors can capture. The $1.72 billion pricing gap in the Circle IPO is an extreme example of this phenomenon.

Second, the corporate listing cycle has significantly lengthened, locking the growth phase in the private market. In the 1990s, companies could go public in an average of 4 to 5 years, but today that cycle has stretched to 12 years. The most valuable growth phases of star companies like SpaceX and OpenAI are all "divided up" within the private market by early investment institutions. According to DWF Ventures' analysis, the total valuation of the top 100 global unicorns is about $2.94 trillion, but ordinary investors have almost no opportunity to participate.

Third, there are multiple arbitrage logics in the Pre-IPO stage. One is the valuation gap between the primary market and the public market—institutions invest at very low valuations in Series A and B rounds, with valuations rising through multiple private financing rounds, eventually achieving book returns several times or even dozens of times at IPO. Another is information asymmetry arbitrage—the degree of information asymmetry in the Pre-IPO market far exceeds that of the public market, with institutional investors having structured due diligence processes and preferential allocation terms.

Take SpaceX as an example. Its valuation curve shows a steep growth parabola: post-money valuation after private financing in 2021 was about $100 billion, rising to $350 billion in December 2024, jumping to $800 billion in December 2025, and further surging to $1.25 trillion in February 2026. Google invested about $900 million in SpaceX in 2015. Based on the IPO valuation, that investment has soared to about $100 billion, a return rate exceeding 100 times. Meanwhile, investors entering at the IPO offering price, with the same $900 million investment, could only get about 6.66 million shares, accounting for less than 0.01% of the company's total shares.

IPO Stage: Higher Certainty, but Narrower Profit Space

The advantage of the IPO stage lies in certainty. Listed companies must undergo rigorous financial audits and information disclosure, providing investors with verified financial data and public operational information. Additionally, post-IPO stocks have public market liquidity, allowing investors to buy and sell at any time, avoiding the common lock-up periods and liquidity difficulties of the Pre-IPO stage.

However, the price of certainty is a narrowing of profit space. In 2025, over 50% of IPO stocks performed flat in the 3 to 6 months after listing. Another analysis points out that if an investor buys on the IPO first day, in about three-quarters of cases, investing in the S&P 500 index actually yields higher returns. This means that IPO-stage investors not only face valuation space already "harvested" by early investors but also bear the additional risk of secondary market volatility.

Data from CVCapital also confirms this pattern: from 2020 to 2023, the median appreciation multiple of a company's IPO valuation compared to its last private valuation before IPO was basically above 2 times, even approaching 3 times in 2022. Venture capital institutions in the Pre-IPO stage locked in low valuations early and captured most of the gains from the valuation gap between the primary and secondary markets at listing.

Pre-IPO Risks: The Other Side of High Returns

Pre-IPO high returns come with risks that cannot be ignored.

IPO Uncertainty. The core risk of Pre-IPO investment is that the company may not complete its listing on the expected timeline. When SpaceX has not yet announced a specific listing date, Pre-IPO tokens may remain in a pre-IPO state for an extended period. Listing plans may be delayed or even canceled due to market conditions, regulatory scrutiny, or company-specific reasons.

Valuation Premium and Illiquidity. Pre-IPO stocks typically trade at a continuous premium of 20% to 40% over the last known private market valuation, and most platforms lack short-selling mechanisms to correct prices. Long-term illiquidity, lack of verified financial data, and complex investment structures with hidden fees are realities Pre-IPO investors must face.

Structural Complexity. Tokenized Pre-IPO products typically do not provide actual ownership, voting rights, or dividends in the underlying company. SPCX does not provide actual ownership of SpaceX shares; its price may fluctuate sharply based on market sentiment, and uncertainties in IPO timing or valuation may lead to unexpected outcomes.

Before participating in Pre-IPO investments, investors must fully understand the product structure, assess their own risk tolerance, and prepare for long-term holding.

2026: A Structural Turning Point for the Pre-IPO Market

2026 is becoming a turning point for the Pre-IPO market.

Three catalysts are acting simultaneously: the Federal Reserve's rate-cutting cycle driving risk asset revaluation, a general deregulatory environment in the U.S. for crypto and fintech, and the rigid demand for liquidity from employees holding shares in numerous unicorns. According to market analysis, the 2026 IPO cycle is expected to be one of the largest in history, potentially unlocking over $3.6 trillion in value.

At the same time, the crypto market is reshaping the way Pre-IPO participation occurs. Gate officially launched a digital Pre-IPO participation mechanism in April 2026, tokenizing traditional Pre-IPO equity through blockchain technology. Users can participate in subscriptions and trading with as little as 100 USDT. Taking the first project, SpaceX (SPCX), as an example, the subscription price is 590 USDT per SPCX, and the total subscription amount exceeded $353 million within 24 hours. SPCX supports 24/7 free trading with no lock-up period.

The core innovation of this mechanism is: using blockchain technology to tokenize traditional Pre-IPO equity into digital assets that can be subscribed and traded on the platform. Users do not need to open overseas securities accounts or meet high net worth thresholds. Traditional Pre-IPO investments require minimum subscriptions of millions of dollars, accredited investor status, and lock-up periods of 7 to 10 years—the entry of the crypto market is breaking down the walls of this "rich club."

Conclusion

The profit gap between Pre-IPO and IPO is rooted in the basic structure of capital markets: the growth phase of companies is lengthened and locked in the private market, the conservative pricing strategy of IPO underwriters creates valuation gaps, and information asymmetry provides arbitrage space for early investors. Data clearly shows that the average return rate in the Pre-IPO stage is significantly higher than in the IPO and Post-IPO stages.

However, high returns inevitably come with high risks. IPO uncertainty, valuation premiums, illiquidity, and the complexity of product structures are all factors Pre-IPO investors must carefully evaluate. In 2026, with the rise of tokenized Pre-IPO products in the crypto market, ordinary investors have, for the first time, gained the opportunity to participate in this market with low thresholds. But this does not mean the disappearance of risks—on the contrary, easier access requires investors to have stronger risk identification skills and fundamental research capabilities.

Final Conclusion: The expected returns in the Pre-IPO stage are higher, but so are the risks. The IPO stage has lower risks but relatively limited profit space. Investors' choices depend on their own risk appetite, capital time horizon, and research ability.

Frequently Asked Questions (FAQ)

Q1: What is the average return rate for Pre-IPO investments?

According to relevant research data, the average return rate for Pre-IPO investors is about 43%, while the profit ratio for IPO-stage investors is about 36%, further dropping to 32% in the Post-IPO stage. It should be noted that this is a statistical average based on historical data, does not represent the specific returns of any individual investment, and does not constitute a guarantee of future returns.

Q2: How can ordinary investors participate in Pre-IPO investments?

Traditional Pre-IPO investments mainly involve private equity funds, special purpose vehicles (SPVs), or accredited investor channels, with very high thresholds. Starting in 2026, crypto exchanges have begun launching tokenized Pre-IPO products, allowing users to participate in subscriptions and trading with low thresholds by holding stablecoins like USDT.

Q3: What is the difference between tokenized Pre-IPO and direct shareholding?

Tokenized Pre-IPO products typically do not provide actual ownership, voting rights, or dividends in the underlying company. They are more of a mapping tool for economic risk exposure, with their value and settlement terms defined by the issuing platform. Investors should carefully read the product description before participating and fully understand what rights they hold.

Q4: What are the main risks of Pre-IPO investments?

The main risks include: IPO uncertainty (the company may delay or cancel the listing), valuation premium risk (Pre-IPO tokens typically trade at a 20% to 40% premium), illiquidity (traditional Pre-IPO lock-up periods last years), and counterparty risk from complex product structures.

Q5: Why is 2026 an important year for the Pre-IPO market?

2026 brings together three catalysts: the Federal Reserve's rate-cutting cycle driving risk asset revaluation, a general deregulatory environment in the U.S. for crypto and fintech, and the rigid demand for liquidity from employees holding shares in numerous unicorns. Super unicorns like SpaceX, OpenAI, and Anthropic are queuing up for IPOs, and the combined valuation of the world's top ten unlisted companies has expanded to over $4.5 trillion.