The Psychology of Money for First Gen Founders

Overcoming the social, cultural, and mental barriers around money

Growing up as a first-generation immigrant, my parents told me to work hard, live frugally, save money, and avoid debt at all costs. I picked going to college on a full ride scholarship at USC instead of going to my dream school because I was afraid of student loans. If we had any money leftover we would send it back home to my dad’s family living in the Chinese countryside. When I deviated from the stable path of becoming a lawyer, deferring law school admission to join a small solar startup called Sunrun in 2011, my parents had no way of helping me on the journey ahead.

I had to learn how to build towards financial wellness operating at early-stage startups and working on my own micro fund as an entrepreneur the hard way. Navigating startup liquidity was a scary experience because no one before me had gone through this experience. Frankly, I’ve never seen wealth transfer between generations. My family has only experienced loss in the form of war, the Cultural Revolution, and immigration. I know I’m not alone in these experiences as so many of my first gen founder friends have confided in me their anxieties around money and a sense of never having enough.

So how do we build world class companies while building towards financial wellness? There are so many social, cultural, and mental barriers to overcome on our money journey as first gen founders, operators, and VCs.

Last Tuesday I had the pleasure of moderating a conversation with Danny Taing, CEO of Bokksu and Gerald Baker, SVB Private’s Head of Trust & Fiduciary Services around the psychology of money. We covered topics like scarcity mindset, debt aversion, the caregiver burden, and ways to create transformative mindset shifts. Read more about the event here.

I.     How to move from scarcity mindset to abundance mindset

Danny shared his experience bootstrapping Bokksu to $20M ARR before raising venture capital money. Before raising venture funding, he felt like he had to do everything himself, packing boxes with his mom and working 12-16 hours days without a founder salary. Raising his Series A from Valor Siren helped shift his mentality from scarcity to that of abundance.

“Because now there is an actual funding pool of the company and…things are more in a stable pace, I actually can think about leveraging the funds, debt, or time to produce more revenue and more value, which was not a mindset I ever had. I always tried to do everything.”

With venture funding, Taing began to see debt as leverage and equity, freeing up time for him to delegate his duties as a founder, hiring virtual assistance and scaling his company with a bigger team.

Moving from scarcity to abundance is not just a switch you can turn on. Instead, changing how we think about time, money, and resources is an iterative process. One that requires trust, building confidence in yourself as a founder, and the opportunity to take outside funding and help.

II.      Overcoming debt aversion

I grew up being told you need to pay off your mortgage as soon as possible. Pay for everything in cash if you can. Debt is bad. After working with SVB Private and learning from more financially savvy friends, I realized debt can be leverage. Debt can offer you extra runway not just for your company but also for your personal life as well. Seeing tech friends take out a loan against their startup equity to get a mortgage really changed how I saw debt firsthand. Not all debt is bad. In fact, some debt can help you. When used correctly debt can be a smart financial instrument for you to have more runway in your company and personal life to reach your goals.

III.     Honoring the caregiver mindset and giving back to your community

Often first gen founders face the burden of being the first to do X.  But with that success comes the burden to give back to their family and community. Danny said, “I want to make sure my parents are all set.” In Chinese heritage, it’s important to show filial piety to one’s parents as they age. This Confucian practice often manifests in paying off for your parents’ mortgage, buying them gifts, and paying for their retirement. A huge driving force Danny and I share is the motivation to not only create generational wealth for the future but also take care of our parents who sacrificed so much for us immigrating to this country. This type of caregiver mindset requires careful wealth and estate planning so you can take care of your own finances first before helping  the rest of your family. This could take the form of starting a trust or gifting QSBS to your family members.

IV.       Financial wellness is an iterative process, surround yourself with a community of advisors

There were so many points in my own startup liquidity experience that I wish I had done differently with the support of a private wealth advisor. Hindsight is always 20/20. Now that I get a front row seat working with our SVB Private team I realize how important it is to start the money conversation as early as possible. Like so many of my founder friends, I thought you need to be “f*** you rich” to work with a wealth advisor which that is simply not true. Sometimes you just need to talk to someone for advice in the beginning to get ahead of a problem. Speaking to a private wealth advisor helps us navigate the unknown unknowns which I call second degree ignorance.

I wish all of you first gen founders the knowledge, support, and chutzpah to build world class companies while managing your financial wellness and wealth! We are out here as first gen immigrants, founders, operators, and VCs making quantum leaps in one lifetime.

Follow SVB Private and SVB on LinkedIn to learn about and sign up for events like this panel discussion. Learn more about SVB’s startup banking offering and access to other early-stage founder events like these.

And if you’re interested in shoring up your own finances, reach out to a SVB Private Wealth Advisor for a review of your current plan to confirm it aligns with your long-term needs and goals. If you’re interested in signing up for three free years of startup banking, reach out to a SVB Startup Banking advisor for an application.