In the last 6 months, Boost VC had our first major exit. It’s fantastic, but I realized that our founders had never had money before, and now they have a bunch of money. Seems like a great problem to have, and it is. However, easy come, easy go. At Boost VC, we want our companies to end up building value as well as wealth over their lifetime, not one uncommon occurrence, and so we at Boost VC decided to write a letter to them. I don’t know if other funds do this, I think they should. So I figured I would share a majority of the letter in hopes that “Post exit” everyone starts the conversation about having money and how to manage it.
I would love if other VCs or wealth managers started sharing their thought process around money and wealth.
— — — —
Dear Founder,
Congratulations on a successful exit! You are the cockroach, hence the shirt we are giving you that says you are a cockroach.
At Boost VC, as you know, we are a family of founders trying to make SciFi a reality. Family first, as that is the case, I wanted to bestow some words of wisdom on you as you move from “scrappy founder” toward “Having money founder.” BTW — stay scrappy is the first bit of advice.
You have money now.
I don’t know the specifics, but I would imagine it to be millions of dollars. You are young, and you have money. So my first bit of wisdom — don’t spend it all in one place.
I have a personal mission to help everyone on the planet invest wisely, and understand their investments. You have been blessed with the ability to work hard, and creatively to pursue your dreams, and that ended up making you money. Every day we (humans) make investment decisions, the opportunity cost between a coffee at Starbucks or at home, 5 beers or 1 beer, a Ferrari or a normal car that can actually get you to wherever you want to go. The way I think of it is, in the present, I am always making decisions on how Future Adam is going to like it in the future. I like to think of it as “Would future Adam want me to do this and will he be better off?” The longer your investment time horizon is for “Future you”, the more wise you will be with your investments.
The next things I would like you to do is to answer these questions for yourself:
- What is money to you?
- Why do you want more money?
These two questions will help you figure out what you should do with your money and how to allocate it. They also aren’t as easy as you would think to answer. Everyone on the planet has a different relationship to money. Now here is a list of
1.
Happiness is having your health, family, friends, a roof over your head, a bed to sleep in, food to eat, clothes to wear and running water… also exercise. So cover those bases with your new found money. Figure out how to fill that “startup debt” you have acquired over the past 5 years. Visit friends and family, try exercising once — Find a house you love (worst house in the best neighborhood is the best investment), learn to wear actual clothes. If all of these bases are covered the rest is a surplus.
2.
Don’t make any major purchases for 6 months. All the sudden the opportunities for you are endless. You will look at something and be like “I can buy that”… don’t. Just sit on the money and live as if you didn’t have it for a while. This will allow you to breath. As my Dad says “Don’t let it burn a hole in your pocket.” Meaning, you don’t need to spend it, you don’t need to do anything with it.
3.
You will suddenly have friends who have business ideas. If you are going to invest in them/loan them money, know that the money you lend/invest is probably never coming back your direction. However karma might come back your direction — It’s always a net positive to help a friend, but be responsible, and don’t let it wreck the relationship. Generally the best rule to follow is “Neither a lender nor a borrower be.”
4.
Figure out your personal mission
“Some people are so poor, all they have is money”
— — -
- Diversify.
- Bet on yourself.
- Invest in what you believe in.
Best thing you can do is invest in yourself and your perspective of the world. On a ratio basis, I’ll give you my own personal example:
1st: Have 2–3 years worth of cash in your bank account. Make sure that you and your loved ones are taken care of if you lose it all. Everyone is different. If you have a family and a house, it’s different than if you are single and rent an apartment.
40% — Have managed for you (In professional managers)
- PE
- VC
- Public markets
- Commodities
- Real Estate
- Crypto
30% — Bet on yourself — — — — — — — — This is what got you where you are, this is what has continued to work for me.
- Entrepreneurship
- Individual investments
- Workout equipment
- Books/Classes
- Fitness trainer
- Yoga
20% — Cash (Or Bitcoin)
- Just in case everything goes down
10% — Do whatever the hell you want, it’s your money.
- You got money. Have fun with it every once in a while.
Invest in the direction you want the world to go.
In my opinion there are not as many places to put your money as you would think:
- Public Markets
- Real Estate
- Private Equity
- Venture Capital
- Direct to Startups
- Crypto Currency
- Raw materials (Gold, silver…)
In the Crapper (Literally throwing money away)
- Cars
- Boats
Long story short, it’s your money, do what you want, but we would love to set up time for you to speak with different people about how they manage money.
Be the Cockroach,
Adam, Brayton, Maddie and the Boost VC Team
