Seed investors rarely see the headline price

In September 2022 Adobe agreed to buy Figma for around $20bn. Fifteen months later the deal was dead, abandoned in the face of opposition from competition regulators in the UK and Europe. Figma's investors finally got their exit when the company floated in July 2025, almost three years after the original offer and at a slightly lower price.

That story sits at the heart of a recent GoingVC breakdown of how exits actually work, and the point it makes is one every founder and early investor should remember. An acquisition is an announcement. An exit is the day ownership turns into cash. The two can be years apart, and a fair amount of money apart too.

What a headline price hides

GoingVC follows a US fund through a $100m sale. The same logic can be tested on the people who usually go first in the UK: SEIS angels.

Take a fairly ordinary path. A company raises £250,000 under SEIS at a £1m pre-money valuation, so the seed investors own 20 per cent. One angel puts in £25,000 and holds 2 per cent. Two years later an EIS round of £750,000 at £3m pre-money brings the angel down to 1.6 per cent. Two years after that, a Series A fund invests £3m at £9m pre-money with a standard 1x non-participating liquidation preference, meaning it can either take its money back first or convert and share pro rata, whichever pays more. The angel now holds 1.2 per cent.

In this simplified example, a buyer offers £8m in year seven. At 1.2 per cent, the angel's back-of-envelope figure is £96,000. The cash looks rather different. The illustrative steps run as follows:

• Headline offer (enterprise value) of £8.0m: £96,000 on paper.

• Less net debt and deal costs, leaving £7.0m of equity value: £84,000 if shared pro rata.

• Series A takes its £3m preference first, leaving £4.0m for ordinary shareholders: £64,000.

• 10 per cent held in escrow for 18 months, released if there are no warranty claims: £57,600 on completion day.

Dilution is worked out on share percentages, not on cash invested, so each new round shrinks existing holdings in proportion. A round that sells 20 per cent of the company turns 2 per cent into 1.6 per cent; one that sells 25 per cent turns 1.6 per cent into 1.2 per cent. The example assumes no employee option pool, no further rounds, a single class of preferred shares and no fees beyond those shown, and the figures are rounded. It is a simplified illustration, not a forecast, and real deals will differ.

Converting its 25 per cent would give the Series A fund only £1.75m, so it takes the £3m preference instead. Because the fund has taken its money out rather than converting, the remaining £4m is shared among the other 75 per cent of shares. The angel's 1.2 per cent of the company is therefore 1.6 per cent of that pot, or £64,000. A tenth of that is held in escrow against warranty claims, so £57,600 arrives on completion and the last £6,400 follows a year and a half later, if nothing goes wrong.

One detail here is very British. SEIS and EIS shares must be ordinary shares with no preferential right to the company's assets on a winding up. Seed angels therefore sit behind any preference that later investors negotiate. At a strong exit that rarely matters. At a modest one, it decides who gets paid.

None of this makes the sale a bad outcome. £25,000 becoming £64,000 is a 2.56x return on the money invested. With 50 per cent income tax relief the angel's real outlay was £12,500, which puts the return closer to 5.1x on net cost, and because the shares were held for more than three years the gain should qualify for the SEIS capital gains exemption, provided the conditions continue to be met, as set out in the HMRC Venture Capital Schemes Manual. A decent result. But it took seven years, eight and a half for the final pound, and it relied on one buyer turning up and one deal closing. To turn that £25,000 into £250,000 on the same terms, the company would have needed to sell for roughly £21m in equity value: three times what this buyer was prepared to pay.

Three years is the minimum, not the plan

Nothing in SEIS stops an investor selling. The lock-in is voluntary: hold for at least three years and the relief is yours to keep; sell earlier and the income tax relief is clawed back, with the capital gains exemption lost alongside it. Most angels choose to wait because the numbers make waiting the sensible choice. It is the bargain they accepted in return for among the most generous tax reliefs on offer.

The trouble starts in year four. The relief is secure, the investor would quite like some money back, and there is usually nowhere to sell. The company is not ready to be bought, there is no market for its shares, and the only exit on offer is one the investor cannot control: a sale or flotation, at a time chosen by somebody else.

The wait can be long. Beauhurst tracked 2,582 UK companies that were at seed stage in 2017; five years on, just 2 per cent had exited through a sale or listing. Across the wider market, NatWest's 2026 outlook puts the figure at around £2.70 invested in UK venture this year for every £1 returned through exits. Money is going in far faster than it is coming out.

The founder's stake in investor exits

It is tempting to treat all this as the investors' problem. It isn't.

Angels who have waited six or seven years without a penny back are slower to follow on, slower to introduce friends, and less likely to back a founder's next company. Every pound stuck in a seed holding is a pound not being recycled into the next set of startups. For a UK ecosystem that leans so heavily on SEIS and EIS money at the earliest stage, that recycling counts for more than any single headline deal.

A second way out

Secondary sales are the obvious answer, and they are not new. Private company shares have always been transferable in principle. What has been missing is a dependable way to find a buyer, agree a price and settle the trade without weeks of legal work.

That is starting to shift, and faster than many expected. As rules for digital securities take shape in the US, the EU and the UK, a new set of liquidity providers is appearing. Most of it is aimed at institutions for now, with some reaching retail investors.

In the US, Charles Schwab agreed in November 2025 to buy Forge Global, one of the best known marketplaces for private company shares, for around $660m to open private markets to its retail and adviser clients, while the SEC has cleared Nasdaq and the NYSE to support trading in tokenised shares. In Europe, Robinhood began offering EU customers tokens linked to the value of OpenAI and SpaceX in mid 2025. These were not shares in either company, and the launch showed the risks: OpenAI said publicly that the tokens were not OpenAI equity and that it had neither partnered with Robinhood nor endorsed the offer.

In the UK, the first trades under PISCES, the new framework for trading private company shares at set intervals, took place in March 2026 through JP Jenkins and the London Stock Exchange's Private Securities Market. Tokenised share registers, meanwhile, can reduce the cost and friction of recording and transferring ownership. The Ondo Private Markets notes show the same demand from another angle. For SEIS holders, a secondary sale after year three keeps the capital gains exemption, provided the original relief was properly claimed.

It is early. Trading is thin, pricing a private company is genuinely hard, and most of the early activity involves large, well known companies rather than seed stage businesses. Secondaries will not replace a good acquisition. What they can offer is an option partway through, so that a patient investor's whole return no longer hangs on one buyer and one completion date. British Business Bank research on UK venture returns points to the same gap between paper gains and cash.

The question to ask on day one

GoingVC ends with three checks on any exit: has it closed, what actually reaches shareholders, and when does the money arrive.

For UK founders and seed investors a fourth is worth adding, asked on the day the round closes rather than the day an offer lands. If no buyer appears for seven years, how does anyone get their money back?

Plan for the exit, by all means. Just don't make it the only door.

Sources

• GoingVC, The Anatomy of an Exit: goingvc.com

• Fortune, Adobe abandons Figma takeover (December 2023): fortune.com

• Axios, Figma raises $1.2bn in IPO (July 2025): axios.com

• Beauhurst, Startup fail, scale and exit rates in the UK: beauhurst.com

• NatWest, UK venture capital outlook 2026: natwest.com

• HMRC Venture Capital Schemes Manual, SEIS disposal relief (VCM40180): gov.uk

• FinTech Futures, Charles Schwab to acquire Forge for $660m (November 2025): fintechfutures.com

• The Block, SEC innovation exemption for tokenised securities (May 2026): theblock.co

• The Block, Robinhood to offer tokenised shares of OpenAI and SpaceX to EU users (June 2025): theblock.co

• TechCrunch, OpenAI condemns Robinhood's OpenAI tokens (July 2025): techcrunch.com

• Mishcon de Reya, PISCES takes flight: the first trades (March 2026): mishcon.com

This article is for general information only and does not constitute financial, investment, tax or legal advice. The worked example is illustrative, uses simplified assumptions and does not reflect all fees, taxes, dilution mechanics or transaction terms. SEIS and EIS eligibility, relief and tax treatment depend on individual circumstances and may change; readers should take professional advice before making investment decisions.