When high impact startups outside the major venture capital centers start getting on the radar screens of larger established venture center investors, their angel investors will from time to time be faced with a choice: should they cash out (sell their angel shares into the new VC round) or hold on to those shares in anticipation of a much bigger exit down the road. This is, as problems go, a pretty good one to have. That said, it is still a problem, and one that many angels find vexing. Herewith, some thoughts for angels struggling with this “high quality” problem.To put some “real world” parameters around the problem, let’s posit that our angel invested $250k in the angel round at $0.25 share, as part of a broader investment strategy envisioning investing an aggregate of $2.5 million of capital in ten seed/early stage portfolio companies. One year later, a traditional, Silicon Valley based venture fund comes along and offers a $5 million investment at $1.00 per share – and offers to buy the angel’s shares for $1.00 each as well. Let’s assume that our angel has no particular insight on the future success of the company, beyond that a quality early… Read full this story
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