The New IPO Calculus: Why the Growth Story Now Starts Before the Listing

As companies stay private longer and headline names like Anthropic and SpaceX draw growing client interest, advisors are increasingly fielding a version of the same question: if I want exposure to the next marquee listing, when — and how — should I actually invest? The answer, according to Michael Halper, Partner and Portfolio Manager at ABS Global Investments, increasingly points earlier than the IPO itself.

ABS recently published research showing the average U.S. company is now more than 11 years old at IPO, a sharp departure from prior decades and a sign that much of the value creation once captured by public small- and mid-cap growth investors is now happening in the private markets.

Halper detailed what that shift means for advisors, how pre-IPO investing differs from traditional venture capital, and how to have a disciplined conversation with clients drawn in by high-profile private company names.

CM: Why are companies remaining private longer, and what does that shift mean for individual investors?

MH: The typical age at initial public offering (IPO) has risen from approximately seven years in the late 1990s to more than 11 years today, a change that investors need to directly consider. A deeper pool of private capital has allowed companies to scale without the costs and quarterly pressures of public markets. For financial advisors, that shift changes where clients can access growth, as more company value may be created before a public listing. At ABS Global Investments, we believe advisors should understand how late-stage private growth exposure may complement public equity allocations, while weighing the different liquidity and risk characteristics. Based on our research on where value is being created as companies stay private longer, we launched IPOSX, which enables investors to access private companies in a public fund, and complement their public equity allocations. We’ve seen substantial interest from advisors seeking exposure to these companies while many have delivered strong pre-IPO growth that, in the past, may have come post-IPO.

CM: Is more enterprise value creation occurring before companies go public, or are investors underestimating the growth that can follow an IPO?

MH: Meaningful growth can occur both before and after an IPO, so advisors should avoid treating a public listing as either the beginning or the end of an investment opportunity. However, as companies remain private longer, a greater portion of their scaling may happen before public investors can participate. For advisors, the practical question is not simply which side of an IPO offers more upside, but whether a client’s portfolio has appropriate access to different stages of a company’s growth and whether the risks and liquidity trade-offs are understood.

CM: When is the appropriate point in a company’s lifecycle to consider a pre-IPO investment?

MH: For advisors evaluating late-stage private investments, a useful starting point is companies at Series D or later, meaning businesses that have completed several rounds of private funding and are typically more mature in their development, potentially 12 to 36 months from an expected IPO or strategic transaction. At this stage, companies may have established revenue, a strong market position, improving margins and a clearer path toward liquidity than earlier-stage ventures. That does not make an exit certain or eliminate the possibility of loss. Advisors should assess the underlying business, entry valuation, expected holding period and fit within each client’s risk tolerance before recommending an allocation.

CM: What level of financial disclosure should investors demand before committing capital?

MH: Advisors should conduct diligence beyond a fact sheet or marketing presentation. For an investment vehicle, the prospectus and statement of additional information are important starting points, with particular attention to investment strategy, sourcing, valuation policies, total fees and expenses, and liquidity restrictions. Advisors should also seek to understand what financial information is available on underlying private companies and how frequently valuations are updated. The goal is to ensure clients understand both what they own and what information may be less readily available than for publicly traded securities.

CM: What are the clearest warning signs that client enthusiasm is being driven by brand recognition or fear of missing out?

MH: A typical warning sign is clients asking for exposure to a recognizable company such as Anthropic, OpenAI or SpaceX without asking about its fundamentals, valuation or investment terms. Advisors should be alert to expectations of a quick gain around a possible IPO, or a proposed allocation that exceeds the client’s ability to tolerate illiquidity and losses. Brand recognition can be a starting point for a conversation, but it should not be a substitute for due diligence. The advisor’s role is to move the discussion from headlines to valuation, time horizon and portfolio fit.

CM: What’s the single most important thing an advisor should get right before recommending pre-IPO exposure to a client for the first time?

MH: In our view, the most important step is matching the client’s liquidity needs and risk capacity to the investment, then sizing the allocation accordingly. Late-stage private investments can require a multiyear holding period, and the timing of an IPO or other exit remains uncertain. Clients should not rely on that capital to meet near-term spending needs. At ABS Global Investments, we view late-stage growth as a potential long-term portfolio allocation, not a short-term trade tied to a headline or anticipated listing date.