Invest in unicorns before they IPO

Uber. Airbnb. Facebook. 

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Have you ever sat back and imagined if you’d had the chance to invest in those unicorns before their initial public offering (IPO)? 

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Getting in on the ground floor of today’s startups is much easier than it was when those tech titans went public. Access is expanding to a much wider pool of investors, thanks to the rise of the private secondary market, where investors can buy and sell shares of pre-IPO companies.

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What defines a unicorn today?

A unicorn reaches a 1 billion private valuation — but that milestone is only the starting point. A billion valuation reflects pricing set in private capital markets, not the public market or a live stock price on a stock exchange.

According to data tracked by sources like Crunchbase, the number of unicorn companies has expanded dramatically over the past decade, particularly in the U.S. While unicorn status was once rare, waves of venture capital funding have created more new unicorns, especially across sectors like fintech, enterprise software, robotics, and broader software and data infrastructure.

Companies such as Stripe, Databricks, Revolut, and SpaceX illustrate how unicorn companies can scale through successive funding rounds — from a series C round to a series G round — sometimes surpassing 10 billion valuations before even considering a listing.

Key takeaways

• Unicorn status means a private valuation of $1B+.
• That valuation is set in private capital markets — not the IPO market.
• Many unicorn companies now stay private longer than firms did during the dot-com era.
• Early investors often capture meaningful upside before shares become publicly traded.
• A billion valuation does not guarantee long-term durability.

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Why everyone wants a piece of a unicorn

In finance, a “unicorn” is a privately held company valued at $1 billion or more. Investing in a unicorn before it grows its proverbial horn offers the potential for significant gains. 

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Those rewards encourage venture capitalists and others to weather the risks associated with these types of startups, such as low liquidity, high volatility, and an unclear valuation. 

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What makes a startup a unicorn?

Aileen Lee, a venture capitalist, came up with the term in 2013 to show just how rare these ultra-successful startups are — like spotting a unicorn in the wild. 

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(Well, okay, maybe a little more common than that…)

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Many of these startups launch pioneering products or take an innovative approach to solving a common problem. Current unicorns include TikTok-owner ByteDance, ChatGPT-creator OpenAI, and Singaporean fast-fashion giant SHEIN. 

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Why secondary investing in unicorns is gaining momentum

Past performance never guarantees future results, but many unicorns have seen a “first-day pop” upon going public, with some seeing their valuations grow up to 30%. With that historical trend in mind, the potential appeal of investing in these companies before the broader market buys in is self-evident. 

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But secondary investing isn’t just gaining momentum among those on the outside looking in. Startup executives and employees alike are embracing secondaries as well. 

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For private shareholders, the ability to sell shares on the side can help ease financial stress, which is key in the startup sector of the market, where money can be tight. Selling secondary shares might be especially attractive during uncertain economic times. It may also appeal to management as a way to reward loyal employees. 

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Companies staying private longer than ever

IPOs were once considered the pinnacle for unicorn startups, but that has changed. The recent wave of capital into private markets has given companies the flexibility to delay going public — sometimes indefinitely — creating new dynamics for investors looking to access opportunities sooner. This growing trend highlights the key benefits of investing through secondary markets, offering early access to private unicorns before they IPO.

How unicorns decide their path to liquidity

Reaching unicorn status does not automatically mean an IPO is next. Founders, boards, and their financial advisor teams evaluate multiple exit pathways depending on market conditions, capital markets sentiment, and broader macroeconomic forces.

IPO

An IPO involves confidential filing with the SEC, meeting governance requirements, and ultimately listing shares on a stock exchange. The IPO market provides access to deeper pools of capital and allows shares to become publicly traded.

However, IPOs also bring increased scrutiny and stock price volatility influenced by investor appetite and interest rates.

Direct listing

A direct listing allows existing shareholders to sell without issuing new shares. This approach works best for companies with strong brand recognition and sufficient liquidity.

M&A

Some unicorn companies pursue M&A instead of a listing. An acquisition can provide liquidity faster, though it may limit upside compared to a successful IPO cycle.

Staying private longer

In strong funding environments — especially when VC funds and institutional investors with deep pockets are active — companies may choose to delay public entry. In 2025, after raising large late-stage rounds, some unicorns may retain leverage over timing rather than rush into uncertain market conditions.

What changes before a unicorn goes public?

Transitioning from private to publicly traded status requires structural upgrades.

Governance and compliance

Public listing increases scrutiny. Companies must strengthen internal controls, expand board independence, and formalize reporting systems to satisfy regulators and capital markets participants.

Financial discipline

Audited financials, predictable revenue, and scalable margins become critical. Capital markets reward clarity and sustainable growth potential over narrative alone.

Cultural shift

Private firms operate with flexibility. Public companies must communicate consistently with analysts, regulators, and investors.

For secondary investors, these readiness signals can indicate whether a unicorn is approaching a credible IPO window.

How Augment empowers unicorn investors

Platforms like Augment* give investors the ability to buy and sell existing stakes in private companies or funds well before a traditional exit like an IPO or acquisition. This opens the door for individuals and smaller institutions, such as pensions and endowments, to access private equity or venture portfolios that usually come with high minimums.

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By lowering the barrier to entry, Augment offers an alternative to traditional venture capital investing, which often demands significant capital commitments. These types of private investments can also provide liquidity, helping investors better manage their cash flow needs.

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Curated access to pre-IPO deal flow

Augment provides investors a place to discover pricing, connect with buyers and sellers, and execute transactions from start to finish. 

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On its marketplace, investors may find shares of current unicorns preparing to go public, such as Klarna or Kraken. Better yet, they might just find tomorrow’s unicorn in today’s dark horse.

The risk and reward of investing in unicorn companies

Investing in unicorn companies offers meaningful growth potential — but also meaningful risk.

Potential upside

• Early exposure before public repricing
• Access before broader investor demand drives valuation expansion
• Participation in companies reshaping industries such as fintech and enterprise software
• Opportunity to benefit from renewed investor appetite in the IPO market

Historically, early investors in companies like SpaceX or Stripe captured outsized gains before listing.

Key risks

• Valuation compression if market conditions shift
• Liquidity constraints before IPO
• Dilution through additional funding rounds
• Governance opacity compared to public peers
• Sensitivity to macroeconomic shifts and rising interest rates

Unicorn status alone does not guarantee durability. A disciplined approach evaluates fundamentals, management credibility, capital efficiency, and realistic exit pathways.

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Ready to unlock early access to tomorrow’s unicorns? Explore Augment’s Marketplace and start investing in the companies shaping the future.

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*Securities transactions are executed on Augment Capital, LLC's ATS and offered through Augment Capital, LLC (member FINRA/SIPC). 

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Important Disclosures: Investing in private securities involves substantial risk, including the potential loss of principal. Private securities are typically illiquid, have limited pricing transparency, and often require longer holding periods. These investments are available exclusively to qualified accredited investors and offer no guarantee of returns. Additionally, past performance of private securities does not indicate or predict future results.