Exits and Returns

Exits are the least understood part of investing, as often by the investors themselves as by the entrepreneurs. This is surprising given that a primary objective of investing is to achieve a capital gain through some form of liquidity event. In this chapter, we learn about angel investors exiting their investments. There are five principal venture capital exit vehicles or liquidity events—IPO, Acquisition, Secondary Sale, Buyback, and Write-off. Targeting a return multiple and holing period are important determinants of exit decision for angel investors. Angels can base their decision to exit on the potential of the investment or their liquidity requirement. Liquidity events are far and few in angel investing.