There are few ways for investors to make money from investing in startups.
IPO: Usually suitable for Private Equity firms and angel investors. They make money through listing the company or pre-IPO.
Dividend: Suitable for cash flow positive startup and angel investors. They earn money from dividend periodically. Usually these kind of startups have lower chance to scale quickly but on the other hand, they make tons of profit.
VC model: This model has the highest risk but also highest rewards. VC usually earn money from exit between round or selling the startups. Gaining market share is the priority, hence often they are not profitable.
There is no right or wrong in which model you follow, it depends on the risk appetide and the business nature and business model behind.
