Venture Capital Exit Strategies

When it comes to venture capital, a lot of people discuss about exit options for venture capital. This is one of the most commonly discussed topics of venture capital. The process of fund raising in venture capital includes venture capital exit strategy. The companies and promoters will be able to make money only when there is a reliable exit plan for the investors. This is why it is important for every investor to have basic knowledge about exist options for venture capital. By doing so, the investors are bound to get fruitful returns for the investment and hard work they have done.

Exit options for venture capital help those businesses who wish to make an exit from the venture. It is quite usual to see that many companies and shareholders are searching for the perfect means to get returns for the investment they have made. Usually there is a time frame associated with the exit; it must be as little as 2 years of existence in the venture capital or as much as going up to 10 years. Moreover, the venture capital company may or may not sell all its shares. The reason why a dilemma over selling all shares or retaining a few comes is when there is floatation. If there is floatation at that moment, then the company will sell only a few shares and hold onto the new shares for may be a year or so. If you are looking at a perfect venture capital exit strategy, you can run through the exit options for venture capital and decide accordingly.

There are five exit options for venture capital. If you are planning to go with any one of these, you must find a specialist in the field to help you guide better. Going by the expert’s advice also serves right, go with someone who is associated with IVCA.

Trade Sale

The first option comes in the form of Trade Sale. Under this exit option, you can trade your shares to another firm, however ensuring that the company belongs to same sector. At times, when one venture capital company breaks down, other companies often start worrying about their investments and shares too. Some even go to the extent of making an extent. In such situations, exits are often made via trade sale. You can expect a higher valuation if the firm can get a good quotation for the full stock.

Secondary Purchase

Secondary purchase as the name suggests helps the company to purchase the shares, private equity, not by primary investment but secondary investment. This venture capital exit strategy is suitable for those companies that are not quite willing to trade sale, but have to make an exit. Such companies in a state of not being ready to trade sale, but need to exit can use this option.


Some companies look out for repurchase of private equity shares from certain companies or the management of such companies. As mentioned earlier, any exit option or a venture capital exit strategy must be discussed in length with the expert. The specialist always guides you with what needs to be done, suggest what the best out of the available options is. There are certain conditions, act and other aspects associated with repurchase. By discussing all these aspects with the expert, you will be able to get immense clarity about the conditions. Moreover, before opting for repurchase as a strategy, clearance from professional accounting and Revenue Commissioners is very important. In addition, tax advice is high recommended before stepping onto this path.


Flotation has attracted entrepreneurs for years together. At times, it has proven to be just about one of the best exit options for Venture Capital. Most companies have bound floatation as one of the most financially rewarding options. It is better to sell your company shares on the stock market and get better rewards. Instead of going with other options, floating your business can make things easier for you. Especially in situations that seem too complicated, a lot of experts and specialists often advice their clients to float their business, at times selling the entire stock is the best thing to do.Voting rights and other formalities are included before all investors come to a final consensus of floating the business.

Involuntary exit

Just as how the name suggests, with this exit option, the firm goes into liquidation or as how most call it receivership. When it comes to a few kinds of exits, it is very important to come to a common point of mutual acceptance of the company’s value. There are certain guidelines created by certain bodies that help people in using a common means to value an equity or investment in the venture capital. Based on these guidelines, it gets easier to have some concrete backing and the ultimate result i.e. the best Venture Capital Exit Strategy is consistent and accepted by everyone.

About Sachin Ramje 19 Articles
Sachin, a blogger and web enthusiast having years of experiences both as an entrepreneur and investment banker. He loves to track startup ecosystem and writes about Venture Capital, Private Equity, Startups & Entrepreneurship. Fundgator is his new startup which helps startups to obtain funding from different sources.

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