It Wasn’t Luck, It Was Venture

We often think of IPOs as the moment of arrival. The big, public celebration. The champagne. The closing bell. The pop. But when you study the most valuable companies across the world, those that not only made it public but thrived afterward, a different truth begins to emerge. The companies that truly outperform post-IPO weren’t shaped by the public market. They were built in private.

Across the US, China, India, and Europe, VC-backed companies consistently demonstrate stronger governance, better brand readiness, more robust business models, and in many cases, significantly better aftermarket performance than their non-VC peers. And it’s not just anecdotal, data proves it.

In the United States, where venture capital is almost synonymous with innovation, research by Prof. Jay Ritter from the University of Florida shows that VC-backed IPOs have historically outperformed non-backed peers in the years following listing, particularly in high-growth sectors like tech and biotech. These companies aren’t just better capitalized, they’ve been battle-tested. They’ve gone through multiple rounds of institutional diligence, they’ve hired professional management teams, and they’ve built internal processes that mirror listed-companies’ discipline long before ringing the bell. The public market gets a polished version, but all the shaping happened behind the scenes, in private rooms, with capital that believed early.

The story isn’t confined to Silicon Valley. China’s most iconic companies like Alibaba, Tencent, JD.com, and Meituan were all heavily VC- and PE-backed before listing. Even in a tightly regulated, state-influenced environment, it’s venture capital that consistently signals scale-readiness. According to a 2023 UBS and Caixin study, VC-backed firms on China’s STAR and ChiNext boards have demonstrated stronger post-IPO returns and higher levels of investor trust. Venture, in that market, acts as a trust bridge. It signals not just innovation, but resilience. Especially in a region where policy volatility and opacity can otherwise deter global capital.

India, too, is following a similar path. The IPOs of Zomato, Nykaa, Mamaearth, and Delhivery were more than just listings, they were coming-of-age moments for Indian venture capital. Many of these companies were criticized for their valuation multiples or short-term profitability, but what they had in common was a track record of institutional capital, structured governance, and brand maturity that made them recognizably investable for the public markets. An Avendus Capital report from 2022 found that over 70% of India’s top-performing IPOs in recent years were VC or PE-backed, with stronger investor interest and more consistent trading performance in the months post-listing. The signal is clear: companies that go through multiple layers of institutional ownership tend to perform better when exposed to public capital.

Even in Europe, which often plays second fiddle in startup headlines, the pattern repeats. The continent’s breakout names like Spotify, Adyen, Klarna (pre-IPO), all raised significant venture capital before going public or becoming global unicorns. PitchBook’s 2023 analysis confirms that European VC-backed IPOs show lower volatility and higher mid-term performance than legacy industrial spin-offs or state divestments. In a culture where conservative capital still dominates, venture acts as a modernizer. It professionalizes companies earlier, improves international readiness, and ensures that when companies do go public, they do so with credibility.

So, what does this tell us? That most economic models fail to capture one fundamental truth: capital formation is about more than just timing and liquidity. It’s about shaping. And that shaping happens privately. By the time a company lists, most of the risk has already been taken and most of the real alpha has already been captured.

Public markets offer liquidity. But private markets offer access. If you’re only investing at IPO, you’re entering the story late. Not because you lack conviction, but because you missed the part where conviction mattered most. The real inflection points, the pivot, the product-market fit, the Series B scale, the pre-IPO discipline – all happened away from the spotlight.

This is the single biggest shift in how wealth is built today. Family offices, global allocators, even endowments, they’re no longer waiting for IPOs. They’re building exposure earlier, backing managers who know how to find the next public-ready businesses long before the rest of the world sees them.

Sources:

• Jay Ritter, IPO Data and Performance, University of Florida, 2023
• PitchBook, 2023 Global VC-Backed IPO Report
• Avendus Capital, India Private Markets & IPO Trends, 2022
• UBS & Caixin, China STAR Market Insights, 2023
• Preqin, Private Market Performance Overview, 2023

Frequently Asked Questions