As an Angel Investor it is key to have a proper exit strategy in place even before you decide to invest in a startup. This can prove to be especially challenging as events can drastically change throughout the course of our endeavour and mistakes can be easily made when trying to sell too quickly. This is why during the 2024 EBAN Congress the issue of “Pitfalls to be aware of if you do exits” was set on the main stage with EBAN president emaretus Peter Jungen , Michael O’Connor from AxisBIC, Reima Linnanvirta from FiBAN, and moderator, Ricardo Luz from INVICTA ANGELS.
From the beginning the panel has already established the necessary relationship between Venture Capital and Angel Investors as they finance the growth for exits to even be a possibility. Unfortunately the landscape in VC funding has completely changed as fluctuations in the market have nearly halted all new capital from these entities.
As a result, finding proper ways to exit is more important than ever before. Here are some of the main takeaways from the session and advice the panellists have given:
- The current exit market is way too volatile and the ability to safely IPO’s needs to come back in order to divest properly. It is currently heading in the right direction but will still need time to readjust
- It is important to have the board and the team on the same page in regards to your exit position. Concessions need to be made to make sure everyone is able to get what they want. You should be having this discussion as soon as possible so that no one is surprised by the decisions that are being made later down the line.
- Actively seek buyers so that you can choose the best exit offers possible. These options will allow you to use them as leverage when negotiating a proposal.
- When an offer has been made, focus on the reason why they are buying as it can be used to create the best transaction between founders, investors, and new buyers.
- If you are a small angel, show your value asap to new VCs that invest in growth rounds, if not be ready to step out of the way. If you don’t add value stay away from the board.
In summary current markets are showing difficulties in exiting properly out of your investment position. This is why it is even more important to take the time to actively search for potential buyers and to make it clear what exit strategy you want to undertake with your board and team. Though VC funding is stagnating, our panellists are hopeful that a market correction will stabilise the current situation and funding will start becoming more readily available.
If you are interested in learning more about the past, present, and future state of angel investing, then make sure you join us during the European Angel Investment Summit in Brussels, Belgium on October 15 – 16. Learn how we can the lessons learned from the past to further promote syndication and increase participation of women within the startup tech ecosystem
Discover the program and get your tickets here: https://europeanangelsummit.com/
