In running an angel network, it’s important to drive the funded startups toward an exit.
Investors funded the companies with an expectation of a return typically in the 5 to 7-year timeframe.
While some startups will fail and shut down completely, most startups continue as ongoing businesses.
It’s important to review the status of those startups to see what exit can be achieved.
For those companies that continue to grow, the angel network can help the startup raise the next round of funding from venture capitalists.
If the company has built value but not enough to raise additional funding, the angel group can help find a buyer for the assets of the company.
The development team, technology, and product lines could find a home within another company.
The secondary markets continue to thrive, and so there may be an option to sell the shares of the company to other investors.
Many times the founders want to maintain the business as is and not sell it. The angel network could negotiate a buyout by the founders.
If the company is generating a regular stream of revenue, they can set up a revenue share agreement to pay out the investors from revenue.
It takes an active effort to pursue startup exits and there’s more than one solution.
Consider setting up an exit committee with the goal of examining each investment to find a path out of the deal.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.
Let’s go startup something today.
Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.
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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.