On June 5, 2025, stablecoin issuer Circle officially debuted on the New York Stock Exchange. In just two trading days, its share price soared from the IPO price of $31 to $107.7, marking a cumulative increase of 247%. However, the real winners were the institutions that entered as early investors back in 2018—they saw returns that multiplied their investments several times over as the company went public. In contrast, investors who jumped into the secondary market on IPO day faced a much higher entry cost compared to early backers.
This case highlights the clear gap in returns between Pre-IPO and IPO stages. Which is more profitable: Pre-IPO or IPO?
Return Data: Three Distinct Profit Tiers
A research report on IPOs of emerging companies indicates that Pre-IPO investors enjoy an average return rate of about 43%, while IPO stage investors see profits closer to 36%, and Post-IPO returns drop further to 32%. The gradient among these three tiers is clear—the earlier the entry, the higher the win rate.
Macro data supports this trend. According to S&P Global, the average first-day return for US IPOs in the first half of 2025 reached 15.3%, significantly higher than the 10.5% seen in the same period in 2024. So far in 2025, the US IPO market has completed 168 deals, raising nearly $28.9 billion—the highest since 2021. Yet, the first-day surge itself reveals another side of the story: the IPO debut often involves a substantial "valuation leap," and investors who missed the Pre-IPO rounds cannot capture this excess return.
Looking at specific examples, Cerebras opened Pre-IPO share subscriptions in March 2026 at $100.35 per share, then successfully listed on Nasdaq. Users who participated on the first day saw a composite return rate exceeding 300%. In June of the same year, AI giant Anthropic officially filed its IPO registration statement with the SEC, while early-stage venture capital investors had already achieved returns roughly eight times their original investment.
Why Are Pre-IPO Returns Higher?
To understand the difference in returns between Pre-IPO and IPO, we need to revisit the logic of valuation.
First, underwriters’ "conservative pricing" strategy creates price gaps. In traditional IPOs, underwriters often set the offering price cautiously, leaving room for the stock to rise on the first day. While this approach ensures a successful listing, it also creates a gap between the offering price and the fair market value—this is precisely the profit zone Pre-IPO investors capture. Circle’s IPO saw a staggering $1.72 billion pricing gap, a prime example of this phenomenon.
Second, the timeline for companies to go public has lengthened dramatically, locking growth phases into the private market. In the 1990s, companies could typically go public within four to five years. Today, that cycle has stretched to twelve years. The most valuable growth periods for star companies like SpaceX and OpenAI are now entirely confined to the private market, where early investors reap the rewards. According to DWF Ventures, the world’s top 100 unicorns have a combined valuation of about $2.94 trillion, yet ordinary investors have almost no access.
Third, multiple arbitrage opportunities exist during the Pre-IPO stage. The first is the valuation gap between the primary market and the public market—institutions invest in Series A or B rounds at low valuations, and after several private financing rounds, valuations rise, resulting in multiples or even dozens of times returns at IPO. The second is information asymmetry—Pre-IPO markets are far less transparent than public markets, and institutional investors benefit from structured due diligence and preferential allocation terms.
Take SpaceX as an example: its valuation curve is a steep upward parabola. After private financing in 2021, its post-money valuation was about $100 billion; by December 2024, it rose to $350 billion; in December 2025, it jumped to $800 billion; and by February 2026, it soared to $1.25 trillion. Google invested about $900 million in SpaceX in 2015, and at IPO valuation, that investment is now worth roughly $100 billion—a return of over 100 times. Meanwhile, an investor entering at the IPO price with $900 million would only acquire about 6.66 million shares, representing less than 0.01% of the company’s total equity.
IPO Stage: Greater Certainty, Narrower Profit Margins
The IPO stage offers certainty. Public companies must undergo rigorous financial audits and disclosures, giving investors access to verified financial data and transparent operations. Additionally, post-IPO shares are liquid and traded on public markets, allowing investors to buy and sell freely without facing the lock-up periods and liquidity constraints common in Pre-IPO investments.
However, this certainty comes at the cost of narrower profit margins. Over 50% of IPO stocks in 2025 performed flat within three to six months of listing. Further analysis shows that in about three-quarters of cases, investors who bought on IPO day would have earned better returns by investing in the S&P 500 index. This means IPO investors not only contend with valuation space already captured by early investors but also face additional risks from secondary market volatility.
Data from China Venture corroborates this pattern: from 2020 to 2023, the median multiple of IPO valuations compared to the last pre-IPO private round was consistently above 2x, reaching nearly 3x in 2022. Venture capital institutions entering at Pre-IPO stages lock in low valuations ahead of time and capture most of the upside from the valuation gap between private and public markets.
The Risks of Pre-IPO: The Flip Side of High Returns
High returns in Pre-IPO come with significant risks.
IPO uncertainty. The core risk of Pre-IPO investment is that the company may not go public on schedule. For example, if SpaceX has not announced a definitive listing date, Pre-IPO tokens may remain in pre-IPO status for an extended period. Listing plans can be delayed or canceled due to market conditions, regulatory reviews, or internal company factors.
Valuation premiums and lack of liquidity. Pre-IPO shares typically trade at a 20% to 40% premium over the last known private market valuation, and most platforms lack short-selling mechanisms to correct prices. Persistent illiquidity, absence of verified financial data, and complex investment structures with hidden fees are realities Pre-IPO investors must face.
Structural complexity. Tokenized Pre-IPO products usually do not grant actual ownership, voting rights, or dividends in the underlying company. For example, SPCX does not provide real ownership in SpaceX shares, and its price can fluctuate sharply based on market sentiment. Uncertainty around IPO timing or valuation may lead to unexpected outcomes.
Investors should thoroughly understand product structures, assess their own risk tolerance, and be prepared for long-term holding before participating in Pre-IPO investments.
2026: A Structural Turning Point for the Pre-IPO Market
2026 is shaping up to be a pivotal year for the Pre-IPO market.
Three catalysts are converging: the Federal Reserve’s rate-cutting cycle is driving risk asset revaluation; US regulators are loosening restrictions on crypto and fintech; and a surge in liquidity demand from employees holding shares in unicorn companies. Analysts predict that the 2026 IPO cycle could be one of the largest in history, potentially unlocking more than $3.6 trillion in value.
Meanwhile, the crypto market is reshaping how investors participate in Pre-IPOs. In April 2026, Gate launched a digital Pre-IPO participation mechanism, using blockchain technology to tokenize traditional Pre-IPO equity. Users can subscribe and trade with as little as 100 USDT. For the first project, SpaceX (SPCX), the subscription price was SPCX = 590 USDT, and within 24 hours, total subscriptions exceeded $353 million. SPCX supports 24/7 trading with no lock-up restrictions.
The core innovation lies in tokenizing traditional Pre-IPO equity via blockchain, creating digital assets that can be subscribed and traded on the platform. Users no longer need overseas brokerage accounts or high net worth thresholds. Traditional Pre-IPO investments often require millions in minimum subscription, accredited investor certification, and lock-ups of seven to ten years—the crypto market is breaking down these "rich club" barriers.
Conclusion
The gap in returns between Pre-IPO and IPO is rooted in the fundamental structure of capital markets: extended company growth phases locked in private markets, conservative IPO pricing strategies creating valuation gaps, and information asymmetry offering arbitrage opportunities to early investors. Data clearly shows that average returns in the Pre-IPO stage are significantly higher than IPO and Post-IPO stages.
However, high returns inevitably come with high risks. IPO uncertainty, valuation premiums, illiquidity, and product complexity are all factors Pre-IPO investors must evaluate carefully. In 2026, the rise of tokenized Pre-IPO products in the crypto market is giving ordinary investors the chance to participate with lower barriers for the first time. But this does not mean risk has disappeared—if anything, easier access demands stronger risk identification and fundamental research skills.
Final verdict: Pre-IPO offers higher expected returns, but also greater risks. IPO investments are less risky, but profit margins are relatively limited. Investors should choose based on their own risk tolerance, investment horizon, and research capabilities.
Frequently Asked Questions (FAQ)
Q1: What is the average return rate for Pre-IPO investments?
According to relevant research, Pre-IPO investors see average returns of about 43%, IPO stage investors about 36%, and Post-IPO investors about 32%. Note that these figures are historical averages and do not represent specific investment outcomes or guarantee future returns.
Q2: How can ordinary investors participate in Pre-IPO investments?
Traditional Pre-IPO investments are mainly accessed through private equity funds, special purpose vehicles (SPVs), or accredited investor channels, all with very high entry thresholds. Starting in 2026, crypto exchanges are launching tokenized Pre-IPO products, allowing users to participate in subscriptions and trading with stablecoins like USDT at much lower barriers.
Q3: What is the difference between tokenized Pre-IPO and direct shareholding?
Tokenized Pre-IPO products typically do not grant actual ownership, voting rights, or dividends in the underlying company. They are more of an economic exposure mapping tool, with value and settlement terms defined by the issuing platform. Investors should carefully read product documentation and fully understand what rights they hold.
Q4: What are the main risks of Pre-IPO investments?
Key risks include: IPO uncertainty (the company may delay or cancel listing), valuation premium risk (Pre-IPO tokens often trade at a 20% to 40% premium), illiquidity (traditional Pre-IPO lock-ups can last for years), and structural complexity leading to counterparty risk.
Q5: Why is 2026 an important year for the Pre-IPO market?
Three catalysts are converging in 2026: the Fed’s rate-cutting cycle is driving risk asset revaluation, US regulators are loosening restrictions on crypto and fintech, and a surge in liquidity demand from employees holding shares in unicorn companies. SpaceX, OpenAI, Anthropic, and other super-unicorns are lining up to go public, with the combined valuation of the world’s top ten unlisted companies now exceeding $4.5 trillion.
