What Happens to Exits When VCs Invest

My previous post showed how the math behind venture capital funds determined venture capital exit times. The post included a simple model to show what the median exit times really meant to entrepreneurs and angel investors.

That model illustrated how the decision to accept equity from venture capital investors statistically extends the time to exit for the angels by something around 12 years.

The graph below illustrates that happens to the time to exit, and probability of exiting, without and with venture capital investors. This graphic shows this from an angel investor’s perspective. The times are even longer for the entrepreneurs and friends and family investors.

Angel Exits Without and With VCs

The model, and the graphic below, illustrate a typical startup where if the board decided to exit before accepting VC investment, it might have been sold around year six – four years after the angels invested. But when venture capital investors are added to the corporate DNA, the time to exit extends to somewhere around year sixteen, twelve years after the angels invested.

The rest of this post explains more. This is also a core message in my new book: Early Exits – Exit Strategies for Entrepreneurs and Angel Investors – But Maybe Not VCs.