Money matters

What you need to know for when your startup hits the big time, according to this Houston expert

First thing's first: Don't tell everyone. Jonathan Kitchen/Getty Images

If you have a successful tech startup, you may be working towards an exit plan where your vision and innovation is turned into liquidity. When a unique, innovative idea hits the big time, investors and other tech companies take notice, and some founders of startups discover themselves with sudden wealth.

Whether you take your company public or are eventually acquired by a much larger organization, you may find yourself looking at millions or billions of dollars one day. If this happens to you, there are crucial steps you should consider to help ensure you stay financially healthy for the long-term.

Keep your head down and do your homework.

First, be as quiet as possible about your new windfall. While selling your company may be public knowledge, keep conversations about your finances and situation minimal and confidential until you have a plan. The more hushed you keep your new financial situation, the less pressure you may have from others asking for favors and handouts.

Additionally, do your research before making any decisions. While you are coming to terms with your new wealth, search for the right team, including a financial adviser, attorney, and accountant, to help you set your goals, both long and short term. This may include tax efficiency and structure, such as trusts and family limited partnerships.

Research a potential advisers' philosophy, fees, and expertise. Have a background check run on anyone you hire, including their financial situation. Review your engagement letter and understand the small print. Be patient as you search for the right team — they are extremely important to your future.

Find an adviser you trust.

Part of your team should include a financial adviser who can be an invaluable resource during this time and into the future for many reasons.

First, he or she can help you identify potential present and future financial goals, plan for the next generation, and structure an income stream, which will ultimately help guide your money to survive you. You might find yourself in the unique position to make donations you have only dreamed of, and that, too, requires guidance.

A financial adviser can also help when friends and organizations are looking for financial contributions from you. Sudden wealth often leads to many changes which are hard to anticipate. Do not let your guard down. Family and friends can come out of the woodwork. Also, be aware of frivolous lawsuits and threats. Keep you and your family safe.

Don't go crazy.

Be disciplined in your spending. Some pro-athletes and lottery winners have filed for bankruptcy after blowing all of their wealth. Do not fall into this trap.

With the help of your financial adviser, you may decide to put your money where you cannot access it easily, such as a house or a 529 savings plan for your children's college. Or, you may decide to have your financial adviser help establish a salary for you each month so you can control your cash better.

After working hard to build a product or platform and the success of selling it for top dollar, ensure you are just as wise with your proceeds. Follow trusted advice from a well-vetted financial adviser and take your time to make major decisions. Trust your gut and enjoy the ride!

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Gail Stalarow is vice president and financial adviser with The Clarity Group in the Wealth Management Division of Morgan Stanley in Houston.

Corey Allen had entrepreneurialism in his blood — but it wasn't until he got involved with the Greater Houston LGBT Chamber that he got the courage to break out on his own. Courtesy of Corey Allen

Corey Allen grew up surrounded by entrepreneurship. His family owned several small businesses when he was growing up. But it took the support of his community to push him toward leadership.

From working in an accounting firm to dabbling in a few oil and gas companies, Allen's career trajectory changed when he joined the Greater Houston LGBT Chamber of Commerce. Within the organization, for which he serves as treasurer, he met other motivated entrepreneurs and was given the support needed to open his own business, Ecotone.

Allen spoke with InnovationMap about his career and the importance of the LGBTQ community in entrepreneurship.

InnovationMap: How does Houston differ from other cities in the U.S. in terms of technology and entrepreneurship? What makes Houston different?

Corey Allen: I think everybody does default to Austin, right? People believe that that's the only technology hub in Texas. Houston is new and different from other cities in terms of tech and entrepreneurship, right now especially. In creating three local startups, we experienced tremendous support from well-established groups like the Greater Houston Partnership, the city of Houston with the Mayor's entrepreneurship program, the Greater Houston Chamber of Commerce. But, you know, what I think what is really new especially for Texas, within in Houston, is the local coworking spaces that are globally recognized brands and the coding camps. I think that is what is creating the infrastructure and ecosystem that we've been talking about for the last five years at least. I think that compared to other cities in the U.S., I don't see that type of energy and that type of investment being created in Houston right now.

IM: You mentioned a little bit about being involved in the process of creating three local startups. What makes Houston the right place to be involved in the startup culture that’s cultivating right now?

CA: I think there's two things that come to mind. Houston really is home, and it's always been home for me. And it really is a big, small town. I came from a small town in Texas, about halfway between Houston and Dallas, and our family always navigated to Houston for fun, but also for business. It was really the foundation for my own family, and I think what we get out of Houston is that southern hospitality is a real thing. So, that's certainly the first thing. And the second is that Houston has the foundation for a prosperous ecosystem. Obviously, there's a lot of oil and gas and the Texas Medical Center is already globally recognized. The more that we continue to focus on venture capital and innovation, which is what is wanted and needed right now, Houston is creating our own new technology and entrepreneurship to capture everybody's attention.

IM: What are some of the ways the tech and innovation community support their LGBTQ colleagues throughout the month of June?

Yeah, I love this question. I think it goes without saying for the community to come out and support the LGBTQ community by joining the chamber of commerce. Also, attending our second annual Pride in Business, which is June 28. That's been an outstanding event for all of the businesses in the community to be involved in the LGBT community. In three years time, (the Greater Houston LGBT Chamber) has been growing exponentially to over 125 visible members. And we have corporate partnerships that really speak to the impact that is being made in the community and in Houston. We have corporate partners like Shell and United. And also celebrate and attend the Houston Pride Parade, which is on June 22.

IM: What advice do you have for up-and-coming lgbtq entrepreneurs?

CA: The learning is the action. I used to really be annoyed by the phrase "sell faster." I actually live that now. You can't fail until you act, and now I know that you can't compete until you fail.

IM: That's great advice right there. What does pride month mean to you?

CA: It's very personal, and it hits home. My partner and I are going to be celebrating 19 years together in September, and I think that pride means celebrating a history that we don't stop to think about everyday. We were at a chamber meeting recently, and a member was sharing her experience of walking in the second pride parade. And she said that it wasn't the same. Even the police at the time did not protect the community. And that's a big difference from today. And I think anybody that goes out to the pride parade this year, I want them to know they're safe. And you know, I think that that's what we have to be thankful for today is to know that we can love without constant fear. It really just reminds us that we're not going to let anyone take that away again.

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Portions of this interview have been edited.