This may be a really stupid question, but how do you cash out your investments in these startups? Do you have to wait for them to get bought out or can you sell your stake in the company to other investors?
Hi burger_moon! There are a couple of options:
1. Attempt to sell back to the company
2. Sell your shares to an independent buyer that you've found (the company typically has right of first refusal, which just means they're allowed to outbid the independent buyer)
3. Wait until the IPO, and sell them on the open market.
4. Sell your shares on EquityZen, SharesPost, or something similar.
Thanks for the reply. Have you sold any of your investments so far? What process did you go through if you did?
Every sale I've done so far has been to my network of friends/colleagues. Most people are eager to get some slight financial exposure to the startup world as part of a well-diversified portfolio. There were two steps required: (1) the person I sold to had to be an accredited investor (2) I had to give the company right of first refusal (which required writing a quick letter and waiting 30 days)