How Do Exits Work?
Alumni Ventures' Policies for Potential Exits
AV’s investment strategy is to co-invest alongside established lead VC firms. At exit, we seek to monetize our position expeditiously. At times, there might be exceptions, which are addressed below.
- Our goal is to maximize investor value by running a structured process that over time and across many situations will lead to the best outcomes.
- We recognize the limits to our forecasting abilities.
- AV applies consistent principles across all of its investment funds.
- AV values transparency, communicating with its investors, and distributing capital as expeditiously as possible.
- When judgment is required to exit an investment, we turn to AV’s Special Situation Exit Committee (SSEC) for a decision. The SSEC is comprised of members of the executive management team, the investment management team, the investment advisory council, and the board of managers.
- We believe every exit event is an opportunity to learn and reflect. Sponsoring Investment Teams prepare an exit memo summarizing key facts and learnings from each investment.
CLICK HERE to see the performance of each exited investment for all Alumni Ventures’ Funds over the last twelve months.
MOST COMMON EXIT SCENARIOS
Investment is sold for cash or liquidated
- Unless an exception applies, distributions will be made on a quarterly basis, such that you would typically receive proceeds within 45 days of the end of the quarter, reflecting all the distributions from the quarter.
- Syndication exits are distributed pursuant to the same schedule outlined above.
- Any escrow distributions follow the same guidelines as above.
- Exceptions may be made when appropriate, such as when qualified small business stock (QSBS) is sold or for other reasons identified by AV.
Investment is sold for securities or liquidated
- We collect the securities and monitor the investment.
- These new securities are treated like an original investment in terms of exit strategy.
Selling into a later round of financing or a secondary market
- The Sponsoring Investment Team writes a memo making the case for a sale.
- The AV Routine Exit Team discusses and makes a decision or may invoke the SSEC.
Initial Public Offering (IPO)
- 1-2 months before an IPO, the Sponsoring Investment Team makes the case for exiting into the IPO (if available).
- AV’s default policy is to sell in an orderly fashion and to distribute proceeds to investors according to our published schedule with exceptions as they occur.
- When any stock is held post lockup, a clear timeline tied to predetermined key catalysts which would trigger sale at a future date are identified.
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