“Exits are the best part of being an entrepreneur or investor. It’s when we get financially rewarded for all of the creativity, hard work, investment and risk we put into our companies.”
When I finally inked my buydown from the company I co-founded, it was a surreal feeling. Over the next 3 years, I was going to be bought down to a significant minority position, and we were going to achieve financial independence.
But, one question remained:
What to do with the money we made from our first sale?
The real temptation is to believe that you have the Midas touch and that, since you’ve done it once, you can do it again and again and again. You could potentially apply your Midas touch in a lot of ways: start another company – which is what I did, although more because it was a long-term goal of mine rather than to try to build a new scaled, salable business – play angel or VC investor in other companies, consult with startups and small businesses (which I am available to do as well), or even make yourself available as a CXO for hire.
Naturally, depending on the scale of your sale, you could pursue any or all of these strategies and still have plenty of money left over to satisfy all of your personal needs. Marc Andreessen did this when he sold Netscape, and he’s been an investor/advisor ever since. When a small fraction of your net worth will provide you with all of the income that you could ever need in your lifetime, you get the freedom to explore other paths – philanthropy and building new companies amongst them – without a pressing concern for ROI.
For those of us who get a sizeable chunk without achieving go buy a yacht money, we need to figure out what we should do with our earned windfall.