Investments in startups are typically long-term and usually reach maturity, allowing for exit opportunities (sale) within a period of 5-7 years. There are several ways to monetize the investment:
- Acquisitions: More mature companies companies may decide to acquire the startup you invested in. This is one of the most common forms of exit and can bring significant returns for investors.
- Mergers: The startup may merge with another company, and during this process, the initial shareholders may receive shares in the new entity or be bought out at a set price.
- Selling shares in a later round: As companies grow, they may attract new rounds of funding. In these new funding rounds, there may be opportunities for other investors to make an offer to existing investors.
- Selling to other investors (Secondary Market): Investors may choose to sell their shares to other investors on the secondary market. Currently, on the SeedBlink platform, only equity investments made through a special vehicle incorporated in Romania (SPV) can be sold.
- Initial Public Offering (IPO): If the startup develops significantly, it may decide to go public. This is a complex process and not very common for all startups, but it can provide initial investors with an opportunity to sell their shares at a considerably higher price than the initial one.
- Buyback: The company may decide to buy back shares from the initial investors at a higher value than the purchase price. This can be beneficial if the company wants to reduce the number of external shareholders or reward investors for their initial support.
- Dividends: Although not very common in the case of IT startups, some companies may choose to distribute dividends to their shareholders as they become profitable. This provides a passive income stream, although it does not represent a complete exit.
It is important to note that investments in startups are often very risky, and there is no guarantee that you will achieve a profitable exit. Additionally, they have a low liquidity rate. Please review the risks associated with this type of investment. Diversifying your portfolio and carefully analyzing each investment are essential for minimizing risks and maximizing potential returns.