For a first-time angel investor, there are naturally a lot of questions about the process.

Unlike an investment into a stock, bond, or cryptocurrency, there are no real time valuations available to benchmark where you stand. Nor can you simply jump at the first opportunity to sell your shares after the price jumps above what you bought at.

While this uncertainty can leave some people disenchanted, experienced investors fully understand the nature of early-stage funding. You can’t hit “eject” whenever you feel like it, but that lack of flexibility is more than a fair tradeoff for the booming upside investments of these kind possess.

It helps to understand what you’re getting into when you make a long-term investment of this type.

That’s why we wanted to take some time today to explain the potential exit scenarios for angel investors.

There are two primary exit scenarios: acquisition and an initial public offering (IPO).

While you know what both of those things are, it’s important to understand what they mean in the context of an early-stage investment and how you make money.

When you invest in a Reg CF or Reg A+ filing, you’re often buying what are called Crowd SAFEs (simple agreement for future equity). Best summarized, that’s an agreement between founder and investor to provide the latter with shares of the company at a future time.

For the founders, the key here is that investors of this kind do not need to be listed on cap tables and do not have the ability to vote on company activity (as a board member would). In effect, companies raising capital through the crowdfunding ranks maintain substantially more control over their operations.

That said, in the same way that you buy a stock at a given price, your Crowd SAFE investment carries a given value. This is one half of the equation of how you make money as an angel investor.

Due to the early nature of crowdfunding investments, the share price of your investment is substantially lower – which is where the potential for outsized returns on investment (ROI) lies.

For example, let’s say you invested $1,000 in a startup at a share price of $1 per. Well, if that startup grows and goes public with an IPO price of $15, you would be looking at an ROI of 1,400% once the dust settles.

(Angel investors are typically barred from selling their shares until a given amount of time – often six months – has passed to avoid a mass selloff, thereby tanking the stock.)

On the flipside, startups are prime targets for acquisition. Whether it be a competitor in a given industry looking to absorb a startup, a big corporation looking to enter a different industry, a company looking to bolster its IP or databases, or a host of other reasons – acquisitions happen all the time.

Of course, for a founder to hang up their figurative cleats and relinquish control of their baby, it has to be worthwhile. You’re not going to see a startup with $30 million in annual recurring revenue (ARR) accept an offer for acquisition valuing them at $30 million (or even $50 million).

It’s sort of like the old “If you didn’t want me at my lowest, you don’t deserve me at my best” adage. These companies put the legwork in, they did the difficult part, if they’re going to step off the train, they better be handsomely compensated.

So, in the case of the hypothetical $30 million ARR startup, let’s say it operates in an industry with a usual 5X revenue-multiple valuation. That means that startup is roughly valued at $150 million.

For the founders of that company to be convinced to sell, the offer will have to be substantially higher than $150 million.

So, let’s say they agree to sell for $500 million. If you invested in that company all the way back when it was valued at $20 million, you’re staring at a 49X ROI!

Not too shabby.

Now, when the valuations start creeping into the billion-to-multibillion-dollar range, you see some earth-shaking returns.

For example, DoorDash raised at a $12.5-million valuation back in September 2013. It currently has a market cap of roughly $25 billion. If you had invested in that early round and held your shares to their current standing, you’d be looking at a 199,900% ROI.

In other words, what are your plans for retirement?

This upside is what makes angel investing so enticing.

What are you waiting for?