Exit

Definitions

1. The event by which investors and founders convert their equity into cash — typically via acquisition (M&A), IPO, or secondary sale. The whole point of the VC game, though many startups exit not with a bang but with an acqui-hire whimper.

   In plain English: When a startup's investors and founders finally cash out their shares — either because the company goes public, gets bought, or sells shares privately.

2. The most common exit for VC-backed startups is actually failure — about 75% return less than the invested capital. Of successful exits, acquisitions outnumber IPOs roughly 10:1. The dream is IPO; the reality is usually acquisition or shutdown.

   Example: 'Our Series A investors need an exit within 7-10 years to return capital to their LPs. That clock is ticking whether the business is ready or not.'

   Source: statistical reality

Etymology

1960s

The concept of a venture capital 'exit' develops alongside the VC industry — investors need a way to realize returns

1990s

IPO becomes the glamorous exit; acquisition is seen as the consolation prize

2020s

Acquisition becomes the norm — 90%+ of successful exits are acquisitions, not IPOs

Related Terms

• Acqui-hire
• IPO
• Incubator
• Accelerator
• Direct Listing
• Double Trigger
• Drag Along
• Exit Event
• Initial Public Offering
• IOI
• IPO Lockup
• Management Buyout
• Power Law