Illiquidity, revisited, with a few exceptions
Lesson 2 established that angel positions are illiquid for years by default, no market exists to sell into. That's still the general rule, but a few narrow paths occasionally let an angel realize some value before the company itself is acquired or goes public. None of these are reliable enough to plan around, they're worth knowing exist, not worth assuming will be available when you need them.
| Route | Typical timing | Typical discount to last valuation |
|---|---|---|
| Secondary sale to another investor | Rare before Series B+; requires company/investor consent | 10-40%, depending on demand and company performance |
| Company-organized tender offer | Occasionally at later, well-funded stages | Often close to last round's price, sometimes at a discount |
| SPV wind-down (if invested via one) | Set by the SPV's own terms, sometimes tied to the company's own exit | N/A, typically distributes proceeds only at the underlying company's exit |
Why secondaries are rare, and why that's mostly by design
Most startup stock purchase agreements and SAFEs include transfer restrictions requiring company consent before a holder can sell to a third party. This isn't an oversight, it protects the company's ability to control who's on its cap table, and protects existing investors from a flood of early holders trying to exit at the first sign of trouble. As a practical matter, this means a secondary sale usually only becomes possible when the company is doing well enough that someone else specifically wants in, which is a fairly narrow window.
What this means for planning
Treat any potential secondary liquidity as a possible upside, not a plan. The illiquidity assumption from Lesson 2, capital locked up until a real exit event, should remain the base case for every check you write, with a secondary opportunity, if one ever appears, as a pleasant surprise rather than something you were counting on.
Checkpoint
- Secondary sales, tender offers, and SPV wind-downs occasionally offer early liquidity, but none are reliable or common.
- Transfer restrictions on most startup stock deliberately limit secondary sales; this protects the company and existing investors, not just the seller.
- Treat early liquidity as a possible upside, not a plan; the base case remains full illiquidity until a real exit event.
If anything here still feels unclear, ask before moving to Lesson 29.