If you received Venture Capital then do you have plan to return this fund to Investor ?

Even if you don’t want to prepare a plan to return the funds to investors, a good Venture Capital firm will ask you to prepare one since the funds that they are investing do not belong to them; their funds have a limited life and they’ll need to liquidate their holdings in order to return the funds to their investors (called Limited Partners) before the dissolution of their fund. Some term sheets will include a redemption clause, which will specify a date by which you will need to return the funds to the venture capital firm. The typical exit options for venture capital include the following:
1. Company buyback of shares: This assumes that the business will be generating relatively large cash flows, which is often not the case for early stage companies that are focusing on growth rather than profits.

2. Sale to another VC firm: This is called a secondary private equity transaction.

3. Initial Public Offering (IPO): This is often preferred by entrepreneurs because they can continue to manage the company.

4. Sale of company to a strategic investor: In this scenario, you will probably have to give up control of the company. Also, the venture capital firm will be entitled to a liquidation preference, which means that when the company is sold, they (as preferred shareholders) will get to collect their funds first before any of the common shareholders.

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