Demystifying Startup Exits: What Every Angel Should Know

So you’ve invested in a startup. Now what?

If you’re like most angel investors, the journey doesn’t end with writing the cheque—it begins there. The real question is: How and when will you exit?

While startup investing is gaining traction in India, conversations around exit strategies are still vague or overly optimistic. Let’s break down what startup exits actually look like for angel investors.

The idea that every successful startup ends in an IPO? That’s a myth. In reality, over 85% of exits happen via acquisitions or secondaries—not public listings.

A startup exit is when you sell your stake and realize returns—hopefully at a healthy multiple of your original investment. It’s how you make money from investing in early-stage companies.

Acquisition – The startup is acquired by another company, and you receive a payout for your shares.

Secondary Sale – You sell your shares to another investor in a private transaction.

IPO – The startup goes public and lists on a stock exchange.

Buyback – The founders or the company itself buys back your shares.

Exit During Fundraising – New investors (Series A/B funds) may buy your stake as part of a secondary transaction during a fundraising round. This is one of the most common and realistic exits for angel investors today.

If you’re expecting a 3x return in 2 years—you’re probably in the wrong asset class.

Let’s be honest: startup investing isn’t a quick flip.

On average, startup exits take 5–8 years, depending on the sector, maturity, and market conditions. In India, timelines can be even longer due to regulatory and ecosystem factors.

But if you’re patient and build a strong portfolio, your chances of hitting one or two big winners increase significantly.

Many angel exits in India now happen during follow-on fundraising rounds, as VCs prefer a clean cap table. Always ask founders about this when investing.

Most angels focus on valuation—but your exit rights are hidden in the fine print.

Exit during future rounds – Is there room for secondary exits in Series A/B?

Tag-along rights – If founders sell, can you sell alongside them?

Drag-along rights – Could you be forced to sell in an acquisition?

Buyback clauses – Are any structured exit plans built into the agreement?

Negotiate these terms wisely. Your exit path is defined the moment you enter.

"I’m convinced about the startup, the team, and the vision. But before I write
 the cheque, tell me this—how and when will I exit?"

The next time you invest, don’t just ask about growth. Ask about exits. Explore angel investing with Creddinv.

Disclaimer: This article is intended solely for informational and marketing purposes. It does not constitute investment advice, analysis or a recommendation to invest.