Passive Late-Stage Venture Exposure & Benefits to Advisors
Introduction
At KraneShares, we strive to deliver our clients the most compelling untapped market opportunities in the most efficient way possible. In recent years, private equity opportunities have been top of mind for many of our clients.
We believe the S&P Private Stock Expanding Leaders Index hails a new era of private equity investing. In this paper, we make the case for passive exposure to private markets and for using the S&P Private Markets Expanding Leaders Index to achieve that exposure.
First, we will explore the many reasons why passively investing in private markets, specifically late-stage venture, makes sense for financial advisors and their clients. Then, we will discuss how S&P and KraneShares make that possible.
The Krane S&P Private Leaders Access Fund provides exposure to the late-stage venture market utilizing an index-guided approach in an “evergreen” structure that allows our clients to stay invested over the long term. The fund has been made possible by S&P’s groundbreaking work indexing private markets and KraneShares' commitment to making previously out-of-reach markets accessible.
Why?
Companies are staying private for longer.
The number of publicly listed U.S. companies has declined sharply from its peak in the mid-1990s. In 1996, there were 8,025 listed domestic firms. By 2012, that number had fallen to approximately 4,100, a decline of roughly 49%, even as the U.S. population and economy grew over the same period. Departures from stock exchanges exceeded new listings in every year from 1997 through 2012. Both fewer new listings and elevated delistings contributed to the decline, with acquisitions accounting for an important share of companies leaving public markets.1
Importantly, this decline does not reflect a slowdown in entrepreneurial activity or capital formation. On the contrary, many startups are choosing to raise capital privately and delay or forgo going public entirely. From the 1980s through 2000, the median age of a company at IPO was around 6–7 years.2 Today, companies often remain private for over a decade, supported by deep pools of venture and growth capital.
As a result, value creation that once occurred in public markets is now concentrated in the private domain, leading to increased investor interest in late-stage venture capital to access the next generation of market leaders before they become public companies, if they ever do.
The private stage is now often the most dynamic phase of a company's growth.
Late-stage venture capital refers to financing provided to mature, potentially high-growth private companies that have already passed through early development and product-market fit milestones. These companies have typically raised multiple rounds of capital and are in Series C or later funding rounds. At this point, they may have established customer bases, meaningful revenues, and positive unit economics or clear paths to profitability.
While late-stage venture investing may offer less potential for outsized returns than early-stage venture investing, it can provide exposure to more established private companies. Examples include companies like OpenAI, Stripe, Databricks, and Chime. These firms frequently achieve valuations in billions or even trillions of dollars and generate tens to hundreds of millions in annual revenue before they even receive a ticker symbol. If you added the three largest private companies in the world to the Nasdaq 100 Index, they would all fit squarely within the top 25 largest companies in the index by market capitalization, based on implied valuation.
#9
#11
#15
Similarly, the top five companies in the S&P Private Stock Expanding Leaders Index, if public and included by the S&P 500 Index, would be ranked within the top 100 companies in the S&P 500 Index, based on implied valuation.
| Company | Implied Valuation ($B) | S&P 500 Index Hypothetical Rank |
|---|---|---|
| Anthropic | 1,550 | 9 |
| OpenAI | 1,080 | 12 |
| Databricks | 194 | 62 |
| Stripe | 184 | 66 |
| Anduril | 139 | 91 |
| Neuralink | 60 | 208 |
| Ramp | 57 | 219 |
| Cognition | 55 | 227 |
| Kalshi | 45 | 260 |
| Fanatics | 34 | 310 |
| Figure AI | 34 | 310 |
Key characteristics of late-stage, venture-backed companies include:
- Late Funding Stage: Series C and later, including Series D, E, and mezzanine or pre-IPO rounds.
- High Valuation: Frequently exceeding $500 million; many surpass $1 billion (i.e., "unicorn" status); some even surpass $1 trillion.
- Strong Revenue Profile: Generally generating significant revenue, often over $50 million per year.
- Sector Focus: Generally concentrated in high-growth sectors, including technology, biotech, fintech, and consumer innovation.
- Diversified Investor Base: Generally includes crossover investors (mutual funds, hedge funds), private equity firms, sovereign wealth funds, and large institutional players, in addition to traditional venture capitalists (VCs).
Late-stage VC thus occupies the middle ground between early venture capital and public equity markets, offering exposure to companies in their most dynamic phase of growth, with reduced risk relative to earlier stages and increased proximity to exit events.
Client demand is already there.
We continue to hear from advisors that their end clients are constantly asking them about late-stage private companies. After all, today’s financial news cycle increasingly revolves around a handful of private companies that are potentially worth trillions of dollars despite not being listed on any exchange, anywhere. Suddenly, advisors who may have spent their entire careers dealing almost exclusively with public markets are now finding themselves having to either defend their decision to stay in public markets or scramble to find a suitable private equity investment.
Late-stage venture companies offer a potentially attractive and differentiated risk profile.
Investing in traditional VC funds can be risky. Generally, VCs invest in a great number of early-stage startups with the hope that at least one of them will be successful at generating a return. Often, a handful of investments, maybe a small fraction of the total, contribute all of a fund's returns, and must make up for the larger share of investments that became worthless.
Late-stage venture investing, on the other hand, may not exhibit such widely distributed potential outcomes. The companies targeted by late-stage investors tend to already have a strong customer base, tried and tested product lines, and, in some cases, are already profitable. That is not to say that late-stage venture is not without risk, rather that the risk is more like investing in broad public markets. According to data compiled by PitchBook, failure rates drop by nearly 40% from Series B to Series E funding rounds.
| Financing Round | Failure Rate, Company Count | Failure Rate, Dollar Basis |
|---|---|---|
| Series A | 23.6% | 16.1% |
| Series B | 16.7% | 12.5% |
| Series C | 13.5% | 9.8% |
| Series D | 12.1% | 9.6% |
| Series E | 10.8% | 7.7% |
Although late-stage venture may not always involve the eye-watering returns of early-stage venture, mainly because it does not come with the same extreme risks, it may offer relatively the same diversification benefits through a low correlation with equity markets.
How?
Source real-time transaction and price data.
Like large parts of the fixed income world, the secondary market for late-stage venture-backed shares functions over-the-counter (OTC), involving broker-dealer activity rather than centralized exchanges. While trading activity is increasing, it remains fragmented, with different brokers specializing in specific names. Understanding market pricing in this environment requires aggregating data from numerous sources to form a reliable and comprehensive view.
PM Insights is a private market data provider that addresses this challenge by collecting, processing, and publishing composite pricing data for late-stage private companies. Its pricing engine is powered by a broker-dealer network of over 40 contributors, including leading secondary market participants.3 These brokers regularly share indicative bid-ask levels, executed trade data, trade sizes, SPV characteristics, and other market metadata with PM Insights.3
This data is synthesized to produce composite pricing and implied valuations for each company, based on observable secondary market activity. PM Insights' pricing reflects daily market sentiment and available market observations, including indicative quotations and transaction data where available, enabling a market-informed approach to valuing privately held companies. This is particularly useful for institutional investors who need additional pricing inputs for reporting, risk assessment, or benchmarking.
Beyond pricing, PM Insights offers reference data on financing rounds, share class structure, and liquidity metrics such as average trade volume and bid/ask depth. These capabilities may be useful for index construction and benchmarking tools that aim to improve pricing transparency for private market exposures.
As more capital flows into late-stage venture and private markets in general, the role of pricing providers like PM Insights may grow in importance—helping usher in a more transparent and institutionalized private asset class.
Construct an investable index.
The objective of the S&P Private Stock index series is to give market participants a lens into some of the most highly sought-after privately held, venture-backed companies. The series uses data from PM Insights to inform its constituent lists.
The S&P US Private Stock Top 10 Index is intended to represent some of the largest, tradeable private companies headquartered in the United States. All companies must maintain at least three requests for quotes from brokers in the last three months to remain within the index. Then, at each rebalancing, the index ranks eligible companies to ensure it selects the top 10 latest companies and assigns them equal weights.3
The S&P Private Stock Expanding Leaders Index, which guides the Krane S&P Private Leaders Access Fund, is a version of the Private Stock Top 10 Index that enables a fund with an “evergreen” or perpetual offering to remain invested. Rather than executing a complete reset every quarter, the index expands to include new entrants as they become eligible and large enough to be included in the top 10. Meanwhile, it assigns weights to the existing constituents based on their market caps, based on implied valuations, and only removes companies when they have had a significant liquidity event, such as an IPO or an acquisition. This way, it can be used as an allocation guide and performance benchmark in perpetuity, even though the Fund cannot reasonably sell out of companies every quarter.3
The Krane S&P Private Leaders Access Fund makes the S&P Private Stock Expanding Leaders Index investable, giving advisors a permanent, flexible, and transparent option for private markets exposure.
The Krane S&P Private Leaders Access Fund provides access to the largest US-listed, late-stage venture companies, based on implied valuations supplied through the S&P Private Stock Expanding Leaders Index methodology. The Fund offers an evergreen structure and accepts subscriptions on at least a quarterly basis. Unlike early-stage VC Funds and interval or closed-end funds, the Krane S&P Private Leaders Access Fund will not distribute capital unless you request a withdrawal.*
In the evergreen structure enabled by the S&P Private Stock Expanding Leaders Index, client capital remains invested in these leading private companies. When holdings experience liquidity events, capital is subsequently reinvested into the next leading companies included in the index and available through our network of sourcing agents. By contrast, many other venture capital funds automatically distribute cash from liquidity events, meaning cash may hit client accounts at unexpected times.
Investors in the Fund also receive weekly market updates, statements at least quarterly, and performance reports at least quarterly from KraneShares and S&P. These can be used for regular engagement with clients and education around the benefits and risks of private equity.
Conclusion
We believe advisors today need a private markets strategy. Companies are staying private for longer, and the private stage is now one of the most dynamic phases of potential growth for many companies. Meanwhile, client demand is already building, and late-stage venture can offer similar diversification benefits as early-stage venture capital. For advisors who use index funds for public equity, thanks to S&P and KraneShares, they can now apply an index fund approach to private equity, too. S&P uses real-time transaction and pricing data from PM Insights to construct a suite of private market indexes that are actually investable. The Krane S&P Private Leaders Access Fund makes the S&P Private Stock Expanding Leaders Index investable, giving advisors a permanent, flexible, and transparent option for private markets exposure.
Citations:
- Craig Doidge, G. Andrew Karolyi, and René M. Stulz, The U.S. Listing Gap, ECGI Finance Working Paper No. 451/2015, May 2015; subsequently published in the Journal of Financial Economics, 123(3), 2017, pp. 464–487. The historical figures above use the working-paper version verified here.
- Jay R. Ritter, Initial Public Offerings: Median Age of IPOs Through 2025, University of Florida, December 31, 2025, Table 4. The sample excludes SPACs, REITs, ADRs, and certain other offering categories.
- S&P Dow Jones Indices as of 9/30/2026.
*Please note that the Fund is private and investors must refer to the private placement memorandum (PPM) and limited partner agreeement (LPA) for additional information about risks, expenses, and qualifications to purchase.
Definitions:
S&P 500 Index: An equity index tracking 500 leading U.S. companies and serving as a broad benchmark for large-cap U.S. stocks. Inception date: March 4, 1957.
Nasdaq 100 Index: An equity index tracking 100 of the largest domestic and international non-financial companies listed on the Nasdaq Stock Market. Inception date: January 31, 1985.
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