If you have been in the tech industry for a while, you have experienced various forms of the three main types of late-stage capital raises or exits: late-stage rounds, IPOs, and strategic M&A.

Late-stage rounds. For the last several years, late-stage capital for private companies has been plentiful, relatively inexpensive and light on control provisions and investor protections.  While there have been occasions of sudden and sharp pullbacks, including February 2016 and April 2014, this capital has generally been available for high-growth companies.  An increase in the size and variety of sources of capital, from larger venture funds, public institutional investors, and hedge funds, has fueled these “company-friendly” trends. These capital sources have allowed companies to remain private later and longer than historically possible, and have given rise to the so-called “unicorns”, or private companies with valuations above $1 billion.

Two main groups of investors look to lead late-stage private rounds. One group consists of late-stage venture firms like Insight and TCV who prefer to take market execution risk over the product market fit and market timing risks taken by early stage VC’s. The second group is mostly made up of public stock investors like T. Rowe Price, Fidelity and Janus, along with some hedge funds. For rapidly growing, technology companies, these private rounds are often attractive.  Companies sell a small portion of their business in exchange for growth capital and the later stage company-building expertise of new investors. These rounds sometimes have a secondary component to provide some liquidity to longstanding employees and early investors. With these private rounds, companies are somewhat sheltered from the quarterly expectations of the public market, which is especially helpful for companies who have customer concentration, lower sales productivity and lumpy sales cycles.

IPOs typically involve a company selling 15 to 20% of its shares to raise capital to fuel growth. The IPO process is expensive and time consuming, generally costing over $3 million to prepare and taking 9 to 12 months. And, being public subjects a less established