breckenridgeback t1_j5zbkuo wrote
Reply to comment by its-a-throw-away_ in ELI5: given a startup grows, how does an angel investor's investment turn into cash, if they're buying equity by investing? by Phoenixfire321
It's actually pretty rare for a startup to be turning enough of a profit (or indeed, any at all, although that's changing recently) for investors to make money directly off of dividends. Their money usually comes by selling their share of the company during an acquisition or IPO.
bluehat9 t1_j5ze0id wrote
Maybe rare with "startups" but "companies" do pay distributions and dividends to their shareholders. Some companies aren't looking to IPO or have a large exit and are just cash-flow generating machines
breckenridgeback t1_j5zgx6l wrote
OP's question is specifically about startups, though.
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