Show me the “exit”?

Last month, I had what was technically our first “exit” as an investor.

One of our portfolio companies from our angel fund – A2Z Venture Partners – was acquired. This is definitely an exciting event. But the outcome as an investor is still unknown.

I am happy for the founder, who has become a good friend during this journey. And on paper our new holdings reflect a nice return. But it is all still on paper.

The above led me to question some of the data around “time to exit” of startup companies. We all know that companies are staying private longer. And that the tech titans of today created more value for their investors post-IPO rather than pre-IPO.

It used to be a rule of thumb that it was 6 years to success – either to get acquired (aka M&A) or long-term viability through profitability (aka IPO). Crunchbase shared data at the end of 2018 which indicated a very broad range of time-to-exit, depending on the industry, from 5 years and up to 16 years. In Israel, IVC shared data at the end of 2019 showing an average time-to-exit of 7.89 years for VC-backed Israeli companies.

When does this data stop the clock? Is it when the deal closes or when the investors see a capital return?

Based on what I’ve learned so far I would assume the former.

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