alt Hacker NewsThose with angel experience:
Do angels not get terms to "cash out" in secondaries/later rounds?
I was under the impression that some angels effectively acted as bridge financing to get to later rounds (in this case A/B/C) and to then exit if they wanted to?
While that can always be arranged if all the parties agree, it would be a bad idea for the founders to give the angels the option to cash out like that, as the fact that they're choosing to cash out will tank all further investments. VCs will wonder "What do they know that I don't?"
Always consider signaling risk.
This can be avoided by always cashing out, I guess. But it's bad for angels to always cash out, as letting it ride on the unicorns is the only way to make meaningful returns, if any.
Always consider power law.