An entrepreneur who sold his company immediately locked most of his windfall into 5-7 year investments, leaving himself cash-strapped despite being a multimillionaire on paper. He warns against deploying capital too fast and says to keep a liquidity buffer before committing to long-term deals.
When I look back at my journey, hands down, number one thing that I would do differently is rapidly deploying all of my capital. Post-exit, I went on an investment frenzy and put all of my money into long-term deals that didn't have an exit horizon for like 5 to 7 years at a minimum. And I found myself incredibly cash-strapped because I had deployed so much capital so quickly. Even though I was a multimillionaire on paper, I sure didn't feel like one. My best advice for anybody selling a company or having a liquidity event is to make sure that they're deploying their capital methodically and that they maintain a base of liquidity so they don't run into the same situation as I did.
