Late-stage venture investing: running with unicorns and tigers

As many of the world’s fastest-growing companies are waiting longer to go public, late-stage venture investing is having a whirlpool effect on private markets, drawing in traditional public markets investors, private equity firms and early-stage venture capitalists. Here's why family offices should also be thinking about investing in late-stage ventures.
late stage venture

What you need to know

  • Over the last decade, we have seen an explosion in the number of privately held companies with valuations over $1bn (a.k.a “unicorns”). Much of this increase can be attributed to companies delaying their public debuts.
  • At the same time, many hedge funds and mutual funds are no longer waiting until IPOs to secure their ownership stakes and successful early-stage VCs have been able to raise larger funds to continue to back their winners.
  • This is not just the asset class du jour. Late-stage venture is known to offer higher returns at lower risk and higher liquidity.
Investments Updated on October 21, 2022

As the number of companies delaying their public debuts rises, so too does the number of ‘unicorns’ – with that number leaping from 4 in 2011 to 728 today. This has caused a splash across the market, both private and public. For family offices exploring new asset classes, late-stage venture might be worth considering.

What is a late-stage venture?

While there is no textbook definition of what a late-stage venture is, the term generally refers to a startup that is scaling up its operations. This is often why they are called scale-ups to distinguish them from early-stage ventures.

In industry parlance, late-stage ventures are startups that have found product-market-fit and are now investing in sales and support functions to drive revenue growth.

This phase is the longest in a startup’s lifecycle and – at the risk of being prescriptive – tends to start after the critical Series A financing round. During this time, the business is likely to launch new products, enter new markets and geographies, professionalize its operations and strengthen its management team.

About the Authors

Brendan Murphy

Brendan Murphy

Asset allocation & private markets

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