How Investors Make Money

Private positions convert to cash in a small number of ways: the company is acquired, the company goes public, the company buys the shares back, or an investor sells the position to another investor in a secondary transaction.

None of those are scheduled. A typical venture position takes seven to twelve years to reach liquidity, and most never do. This is the single most under-appreciated fact for people arriving from public markets, where exit is a click.

Paper markups are not returns. A round priced higher than the last one raises the notional value of your position, but nothing is realized until a liquidity event occurs at a price and on terms that apply to your specific share class.