Founders often ignore their personal finance and while we often hear stories of great exits, the reality is that 99% of founders need to plan it a lot better than depend on ‘that’ exit story.
Dhimant shares some interesting perspective.
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2/ You then get some traction, using up your savings and try to raise a seed round. Assume you get a seed round, you finally start taking some salary but it will be only to cover your costs. Hence still no savings and you’re already at least 2 years in.
3/ You manage to grow your startup significantly and are ready to raise a Series A. Once you raise this, you give yourself a more comfortable salary, but it’s definitely not going to be what the market would’ve paid you. It’s 4-5 years now.
5/ Your startup goes for a blockbuster aquisition – yep you make money. In over 99% cases, that does NOT happen. (Exit stories you read on startup blogs are outliers).
So, you end up continuing to grow and scale and hence let go more personal wealth on the table.
6/ Finally if the startup doesn’t scale, you would have lost at least 8-10 years of an opportunity to create & save money.
You are left with nothing much while everyone else during this time – employees, investors, clients – are on salaries and have their savings add up.
7/ Focusing on personal wealth is important, frugality is super critical and saving as much as possible is the only lifeline you have.
Yes we all should work towards scaling massively & building new things (that’s our dopamine), but also need to be aware of personal finance.