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Exits: waterfalls, holdbacks, escrows, earnouts, and carry – some of the complexities of “an exit”

Paul Clark
Paul Clark
Last updated: June 4, 2024
Venture south fallback

“Make Money. Have Fun. Do Good.” is the VentureSouth motto.

This first part, Make Money, is (we believe) the key point of angel investing – and something our members have been able to do. You do it through “exits” – getting your investment back plus, hopefully, a gain when the company you invested in gets acquired. 

To celebrate the most recent successful exit from the VentureSouth portfolio, we thought it topical and helpful to examine some of the concepts and complications around “exits,” and so here is a new series to set the goal for 2021 to be “the year of the exit.”


A lot of work goes into reaching an exit: finding, structuring, negotiating, and executing investments; active work from board members, portfolio connectors, and advisors; exit strategizing, planning, preparation, and execution; and much more – not to mention the never-ending labor of the founders, management team, and employees to build a business by creating value for customers.

After all that effort, the happy day comes when the founder reports to investors that we’ve been acquired for $100 million!

After the initial congratulations, but before the celebrations get too carried away and the proceeds get spent, we need to understand what this actually means: what the proceeds are, who gets how much of them, and when the money begins to flow. We start at the top of a waterfall tomorrow.