Angel investors rely on “exits” – essentially someone buying the company in which they have invested (in a liquidation event) – to make money.
This can be a surprise for people investing in public markets, where exits are as easy as hitting “sell.” They are critical to angel investing, and they require four key ingredients:
2) Aligned investors and entrepreneurs. Investors must make "exit strategy” feature prominently in due diligence - and you should only invest in entrepreneurs whose exit goals match your investment horizon. We talk about this with our investors every time we evaluate a new investment opportunity.
3) A clear plan for an exit. Exits rarely, if ever, “just happen.” As Mac discussed in his UBJ article this week, and in an earlier interview with John Warrillow of “Built to Sell” fame, exits need to be strategized, planned, and rigorously pursued – another “process” that should be integral to your business from the first months, not a rushed afterthought.
4) An understanding of executing exits. Most people don’t get to see multiple exit processes, and rarely have the support to execute their first successfully. This is why we are bringing the ARI's “Executing Exits” workshop to Greenville on 11/30. You should sign up here.