How do I sell my shares after I've invested?
Your investment is likely to be illiquid for a long time– even if the business succeeds (this just means that you are unlikely to be able to sell your equity in the company to someone else for cash).
The only way you can sell your shares in the business is if the business makes an ‘exit’. An exit can be in the form of:
- Initial Public Offering (IPO) – The business grows to a point where it decides to list on the stock market. Once the company is listed, investors will be able to sell their shares on the stock market.
- Trade sale – Another company decides to buy out the business. Investors will be paid for their stake at the purchase price.
- Share buyback – Company management decides to buy back equity (shares) from its investors (this would require shareholder approval, and a selective buy-back would require a special resolution usually 75% of shareholders in the class affected).
When investor funding enables a business to reach profitability, and its growth is no longer constrained by financing, a company may begin to pay dividends to investors.