Question

What exit routes are available for a VC?

Answer 1

Venture Investor are typically people who invest in projects that are very risky and there are not much available source of finance. VC invests in seed stage generally where the entrepreneur has not shown a good history.

The five exit routes typically considered for venture capital are as follows:

(i) Initial Public Offering (IPO): It is the best method to exit. You sell the shares to the public through for sale.

(ii) Trade sale : We sell the business assets to the company working in same industry. Or we ask the to takeover us so VC have an exit

(iii) Management buy-out : the venture capitalist sells her shares back to the entrepreneur;

(iv) Refinancing (or secondary sale): VC sells its stake to another investor. It is like a private deal.

(v) Liquidation: Company is liquidated and closed and salvage is distributed to all the shareholders.