Cathie Wood: Biggest IPO Gains From Pre-IPO Investing

Cathie Wood, founder and CEO of ARK Invest, said in recent comments that the largest gains tied to initial public offerings are captured by investors who take positions before a company lists publicly.

She argued that investors in private rounds generally enter at lower valuations, negotiate preferred terms or locked allocations and hold investments over a longer growth period, concentrating upside in earlier stages.

Wood noted that private financings trade liquidity for lower entry prices, while public listings introduce new capital, greater scrutiny and short-term trading that can compress returns for buyers at or after an IPO.

Private rounds are typically open to venture capital firms, strategic partners and institutional allocators, limiting access for retail investors who usually gain exposure only when shares begin trading on exchanges.

She added that market conditions change the return profile: in frothy markets aggressive IPO pricing can narrow the gap between pre- and post-IPO gains, while in weak markets public debuts can underperform as earlier backers hold through volatility.

Available data cited by Wood indicate many of the largest windfalls have accrued to insiders and early backers rather than to new public-market buyers.

For investors, Wood advised that those seeking outsized returns should expect longer lock-up periods and limited liquidity with private investments. She warned that trading around an IPO does not consistently produce the largest returns.

Her remarks reflect ARK Invest’s long-standing view that timing, investor access and deal terms determine which participants capture gains when startups move from private to public markets.