A 65x Angel Return in 12 Months Sell or Stay the Course

"I have a small angel check ($5,000) that grew to ~$325,000 in 12 months”

“how should I go about selling it? What discount should I expect?"

So much going on in a short paragraph. An angel/VC is:

1) up 65x in 12 months 2) but doesn't believe in the company 3) so would like to sell the position

I kinda want to leave the "for a very good reason, I do not believe in the future of the company" to one side. That could mean so many things, ripe for speculation, but who knows.

This company is clearly "hot" right now (65x in a year is no joke) which suggests that finding someone excited to buy the shares won't be impossible.

(side note - for the large majority of VC-backed companies, finding that buyer is indeed close to impossible. The secondary markets are super skewed to a few issuers)

But she should probably expect to sell at a discount to the 65x she currently holds. And who knows, maybe the company tries to block this sale outright or counters with a right of first refusal...lots of trickiness.

𝗢𝘃𝗲𝗿𝗮𝗹𝗹 𝗽𝗼𝗶𝗻𝘁: 𝗺𝗼𝗿𝗲 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀 𝘀𝗵𝗼𝘂𝗹𝗱 𝗱𝗼 𝘁𝗵𝗶𝘀.

Okay, they should NOT say in public they don't believe in the company's future, that's...a lot.

But they should be looking to take some, not all, of their position off the table when the multiples are so large. Sell 25%, sell 50%, and book some of the gains into real IRR or real DPI for their funds. Especially the small investors!

Easiest sale points are definitely during primary fundraises when the company is in active negotiation about their valuation anyway. But it can be done in all sorts of secondary mechanisms.

If VC is to survive private companies staying private for decades, a secondary valve must spring.