One of the most common type of investors we deal with over at Cur8 Capital is an exited founder. But, in one of the most spectacular first world problems you can get, this actually raises some serious problems for the founder.
So in this article we will commiserate with you on having to deal with a multimillion pound exit and share some top tips on what you should do next.
1. Get a Tax Advisor
This might seem like a really obvious one, but too many founders we have conversations with and they haven’t done it.
The best time to get a tax advisor is a few years before you exit – as you can mitigate a lot of the tax burden that way by getting ahead of the curve.
However, the next best time is now. Tax advisors will help you figure out where to put your money, how to reduce your income tax bill, how to reduce your corporate or capital gains tax bill, and how to plan for inheritance.
Often, they are also a treasure trove of contacts – because it is their job to deal with people like you day in day out.
2. Work out how much you need to live off
You should work out exactly how much you and your family need to comfortably live off for the rest of your life. For most people a very comfortable salary would be £100-200k a year.
In order to achieve this, pick a relatively low risk investment – either a fixed income fund or a property fund – and aim to generate that level of income through that.
For example, let’s say you want to generate £200k income a year and you want to be really safe about it. You might want to park £3.3m into a fixed income fund yielding 6% (spoiler alert, you can find one on Cur8 Capital) and generate that.
Or, perhaps you want £100k but you want to make sure that your capital appreciates too. In that case, you’d put your money into a real estate fund.
This is a vital exercise to do – as it mentally allows you to free yourself from the “am I going to survive” mindset that many people have grown up with.
After that, you can make decisions a lot more freely knowing your backstop is very strong.
3. Don’t become like Smaug the dragon
The one mistake we find exited founders making is that they become like the dragon (Smaug) in The Hobbit. They have made the fortune and now they want to defend it.
But the reality is, it is actually better to build a balanced portfolio of both low risk and higher and medium risk investments. That way things balance out and grow over time.
Because the reality is that, in most cases, higher risk usually means higher reward, while lower risk means lower reward. And with lower reward you usually end up making a loss due to inflation.
So, logically played out, if you just sit in lower risk investments that are not inflation-proof, you ironically end up losing your money despite your best efforts to do the opposite.
4. Be strategically aggressive
The other powerful things you can do with your money is take advantage of what it unlocks for you in terms of investment opportunities.
Now, because you can invest £1m+ into a deal or fund, you can negotiate better rates and you can get access to better investments.
But what a larger ticket also means is, you can strategically put a bigger chunk into an investment you would never be able to do that when you hadn’t exited.
Now you can though – because this is your “risky” money.
And consistently, if you look at the multibillionaires, they are the ones who take educated big bets with a portion of their net worth that really played out. Let’s take Kobe Bryant for example.
He invested $6m into Body Armour right at the start, and that netted his estate $400m by the time they listed publicly.
He was someone who had the freedom and monetary ability to write a $6m cheque – and he took advantage of it.
You don’t have to go as aggressive as that – but do consider venture capital and private equity – either directly or via pooled funds such as those on Cur8 Capital.
5. Come up with a clear life plan for the future
Time and again, the single thing that is muddying the waters in terms of your overall decision making is that you don’t yet have a clear gameplan for the future.
This is vital as it will inform:
- Where you live
- How much you need to survive
- How much time you have
- What commitments you can make now
- And much more.
So give this some serious thought. If you’re in doubt, reach out to the millionaire whisperer – Iqbal Nasim.
Also, while you’re at it, read our whitepaper “Is it wrong to be rich in Islam?” This will explore key themes that will feature on any roadmap.
6. Write your will
This is an obvious one. Your tax advisor will be on your case about this anyway – but you don’t want to give away 40% of your estate in inheritance tax and writing a will will flush this stuff out.
Writing a will is also helpful to think about what you want to do with the rest of your life.
We offer Islamic wills – including trust-based Islamic wills for HNWs – but you’ll want to do this in conjunction with your tax advisor.
7. Do all those things you meant to
We recently met a senior executive who left his job and was now learning Arabic and coding and had started memorising the Qur’an.
Now is your time to get around to all this non-urgent but really vital things. Don’t rush headfirst into your next project. Take 6 months out and do this. This is an investment in your self that you probably won’t get the chance to do again for the next decade.
8. Get into politics, media, culture, academia
You have some clout now as a “rich person”. Use it for the better.
Fund political events and parties. Sponsor media internships and posts. Fund scholarships, think tanks, academic posts, plays, movies, theatre, books, etc.
Whatever you are most passionate about, lean into it and properly establish a name for yourself in that space. We need Muslims like you taking a lead in these conversations and helping to move the cultural discourse in the direction of Godliness.
9. Do more of the same
Chances are you were very good at what you did that resulted in your business being bought out. Don’t be at all shy of just jumping back on the bandwagon and doing the whole journey again in the same or similar field.
We have seen this happen countless times – and with each time the scale of the project becoming larger too.
There is absolutely no shame in sticking to what you know and doubling down on it.
10. Strategic philanthropy
You will now be giving significant zakat and sadaqah – but don’t just give – give strategically.
We wrote a detailed Ramadan Charity Guide last Ramadan detailing 20 top charities that you could consider donating to – based on their impact.
We also did a detailed video exploring the phenomenon here.
The point of charity is to earn reward and to help others – it is not just to make yourself feel good or to give to the charity with the largest ad budget.
But that takes time and effort researching what and how to give – so put in that time. You’re giving a lot of money now so it’s worth the time investment.
As an exited founder you are in a privileged position. You have a duty to yourself and your family first and foremost. Get your house in order and your life on a roadmap.
Then look to help your wider society – and do so strategically. Do it through charitable work, through campaigning and getting involved in what you’re passionate about.
If you want to connect with a group of like-minded other exited founders, drop us a line via our contact us page and we’ll connect you with others inshAllah. Go forth and prosper.