Young firms often seek growth capital to expand operations, and of those that choose to pursue an IPO, roughly 2/3 have raised capital from venture capitalists (VCs). The 2/3 proportion varies by year and is greater when lots of tech firms are in the markets (e.g., the dot-com era). In my research paper with Dr. Colette Southam published in Venture Capital journal, we find that a VC-backed firm is 14% more likely to fail to complete its IPO. Not all “failures” are bad; some firms instead accepted buyout bids. Nevertheless, why do VC-backed firms “fail”? In the research we find two primary reasons. First, VC-backed firms have an alternative to a low IPO price. Instead, the VC can fund another round and then retry the IPO later. Second, VC-backers more often “test the waters” of the IPO markets with firms that are too risky or too early and are screened out by astute equity investors. Does this mean your firm should avoid VC-backing? Quite the contrary, only a very tiny proportion of private firms raise VC money, while most firms going public have VC-backing. VC backing increases your chances of ever getting to the IPO stage.