Exit your startup investment without waiting for theirs.

Deciding which positions to exit

The honest starting point is an audit of your portfolio against three questions. First, has the thesis played out — did what you underwrote actually happen, and is the remaining upside still yours to capture? Second, what is the opportunity cost — what would this capital do in your next three deals versus its likely trajectory here? Third, has your own horizon changed — a fund of one has life events that a ten-year vehicle doesn't.

Notice that none of these questions is "is the company doing badly?" Some of the best secondary sales are of positions doing perfectly well — a later round marked up the stake, the paper gain is large relative to your portfolio, and banking part of it converts luck into permanence. Conversely, a struggling position with real demand behind it may be worth exiting simply because the demand exists now and may not later.

The markdown question, answered honestly

Secondary buyers of minority stakes generally pay less than the last round's headline price, and it helps to understand why rather than resent it. The round price bought preferred shares with liquidation preference, anti-dilution and information rights; your buyer is usually stepping into a plainer instrument. The buyer also takes on illiquidity of unknown duration and a minority position with no control. The discount is compensation for those differences, not an insult to the company.

What narrows it: recency of the round, visible momentum, a clean cap table, a well-papered stake and a competitive buyer process. What widens it: a stale round, tag-along complications, missing share certificates or unclear title. Half of good exit negotiation is simply arriving with clean paperwork.

Running the ROFR without losing the deal

Rights of first refusal deter casual sellers, but mechanically they are seller-friendly once a real offer exists: you serve notice of the buyer's terms, existing shareholders get a fixed window to match, and you are paid the agreed price by whoever ends up buying. The tactical points that matter in practice:

• Get the offer fully termed before serving notice — a vague notice restarts the clock when terms firm up.
• Diary the window. ROFR periods are defined in the SHA and expire; sales stall when nobody tracks the date.
• Expect the ROFR itself to surface buyers — an existing investor matching your price is a completed exit, not a failure.
• Keep your outside buyer warm through the window; the professional courtesy is a defined timeline, communicated.

Old cheques and the tax file

Stakes held for many years bring their own filing homework. Your acquisition cost may span multiple tranches — the original cheque, a follow-on, shares from a convertible that converted at a discount — each with its own date and cost. Bonus issues and splits change per-share numbers. Reconstructing this cleanly determines your taxable gain, and the rules for computing cost on long-held unlisted shares have changed over the years, which is why the calculator above and a competent CA are both worth your time.

Gather early: proof of each investment (bank statements, share certificates or allotment letters, conversion notices), the demat history, and any valuation reports from past rounds. Buyers ask for much of the same file during diligence, so one afternoon of assembly serves both purposes.

Beyond returns: the quieter reasons to exit

Not every secondary is about performance. NRIs consolidate Indian holdings ahead of repatriation planning. Families simplify an estate while the original investor can still explain what each holding is. Angels retiring from active investing convert a scattered portfolio into distributable cash. Operators joining a competitor exit positions that now conflict. In each case the mechanics are identical — valuation, offer, SHA process, off-market transfer, settlement in T+2 working days — but the deadline is personal rather than financial, which argues for starting the process before the deadline gets loud.