The Weird and Wonderful Things Midwest Founders Do After They’ve Had a Big Exit

Whether you stay on post-transaction, become an investor or write a book, there’s a lot to be excited about after your hard work results in a successful sale.

Written by Rob Weber
Published on Feb. 17, 2021
The Weird and Wonderful Things Midwest Founders Do After They’ve Had a Big Exit
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With so many great startups getting acquired or going IPO here in the Midwest lately, one wonders: What do these founders do when they score these big windfalls? Do they do the kind of flashy things coastal entrepreneurs do? You know, like buy an island or a 100-foot yacht or something?

Turns out, a lot of my Twitter followers wondered, too, when I did a little survey. Sure, following your passion, changing the world, building a great team — all that stuff matters. But capitalism brings rewards to those who work so hard. And money is definitely one of those rewards. No shame there.

As a managing partner of an early stage fund that is by founders, for founders, I know many entrepreneurs who have had life-changing exits. We have several who are investors in — and advisors to — our fund. So I thought it would be fun to ask a range of them about their first moves. Or their second and third, for that matter. The answers may surprise you.


Investing in the Future

One deservedly famous entrepreneur in Chicago is Kristi Ross, co-founder of tastytrade, which will join the ranks of the city’s $1 billion exits with its recently announced acquisition by online trading platform IG Group.

Kristi is no stranger to the world of successful financial services startups, as she was previously the CFO at Thinkorswim, which was acquired by TD Ameritrade in 2009 for $606 million.

What did Kristi do for herself post-exit? “I am a minimalist,” she told me. “Time is more valuable than money. And if you don’t have your health, you have nothing. So in celebration, I bought myself a brand new pair of my favorite black Nike running shoes.”

But her personal life has caused her to reflect and make a difference. “Raising three amazing girls while balancing mergers, acquisitions and capital raises, I wanted to ensure my daughters were exposed to philanthropic efforts, always striving to make a difference,” she said. So I wrote a book — Lots of Knots — as my first book of a series for busy moms that want to introduce their young children to philanthropy, showing that little hands can make a big difference. Proceeds are donated to charity.”

Kristi takes her role as a female leader in Chicago and the tech industry very seriously. She especially wants to pave the way for others. “Supporting the future generation of entrepreneurs is important to me — whether that is through our show at tastytrade called Bootstrapping in America, or angel investing behind the scenes or giving time to help advise and mentor.”


Returning to Their Roots

Phil Soran is one of the most successful serial tech entrepreneurs in Minnesota. He co-founded Xiotech, which was acquired in 1999 by Seagate for $360 million. Soon after, he co-founded Compellent, which went huge in an IPO in 2007 and then, in 2011, was acquired by Dell for $960 million.

“When you have an exit, you tend to go back to your roots,” Soran said. “I was a junior-high math teacher turned entrepreneur. My partners and I started our first company, Xiotech, in my Minnesota basement. After we sold the company and left a year and a half later, we went back to the basement and started another company. We went back to our roots! That second company, Compellent, we took public on the NYSE within five years. After running it as a public company for four years, we were acquired by Dell. I stayed one year to transition the company.”

After he retired, someone asked Soran what he was doing, and he realized he didn’t have a solid response. “My answer was ‘nothing,’” he recalled. “I quickly realized that I would not be very interesting to people with that answer. So my new answer was my new life is broken into thirds: one-third business, one-third philanthropy and one-third fun. Quickly, my actual calendar started to track this time split, and my activities had a tie to my roots. Most of my philanthropic time is spent on education challenges of today, harking back to my teaching days. Much of my business time expenditures are spent helping entrepreneurs: I have helped found two additional companies and assisted many young entrepreneurs. Finally, for my fun time, I had to stretch beyond my roots. I have had the opportunity to safari in Africa, bike in Vietnam and Chile and climb to Machu Picchu among other things. Go big on your fun time!”

Dreaming Big in the North Woods

Justin Kaufenberg and a few college buddies brewed up their startup idea in their college dorm at the University of Wisconsin–Eau Claire. Upon graduating, they realized they were onto something and moved to the “big city” — Minneapolis — to seek more business. The startup they founded, originally dubbed TST Media, was later renamed after its product, a youth sports management platform ultimately called SportsEngine. It secured a Series A in 2009 and raised more than $39 million by 2014, through three more rounds.

“SportsEngine was acquired by Comcast/NBCUniversal in 2016,” said Kaufenberg, “but the founders all stayed on through 2019. We had a remarkable three years as part of one of the largest companies in the world. They were terrific buyers and became great friends. Rule number one when you sell your company: Don’t run away. There is so much to learn post-transaction.”

What happened when Kaufenberg and his co-founders stepped down in 2019? “I had intended to be ‘indulgent’ and take 24 hours off,” he joked. “Instead, I started at Rally Ventures the following day. I felt an extreme need to give back to the startup ecosystem. In my first year at Rally, I led investments in five new startups and co-founded two other businesses, both of which are based in Minnesota. I was also able to spend hundreds of hours working with Midwest entrepreneurs.”

You have to love Kaufenberg’s plans now: “My current goal is to repeat the last 12 months every year — for the rest of my career.”

Rally Ventures has offices in Minneapolis and Menlo Park. The firm just closed on its oversubscribed $250 million Fund IV, and it now has $600 million under management. Rally is known as the most active investor in Minnesota, having invested nearly $100 million into 13 Minnesota technology companies, which in turn have created $3 billion in aggregate value.


Childhood Dreams Can Come True

Sometimes founders get the opportunity to take some money off the table at a funding round — especially if they bootstrapped. That was the case of Code 42 Software of Minneapolis, which didn’t take any venture capital until 11 years after its founding in a gigantic $52 million Series A. (Overall, it has now raised a total of $137 million.) Mitch Coopet, one of three co-founders, exited the company in 2016.

“The first thing I did was leave it alone!” he told me. “I didn’t believe the money was really mine or if there was a hold period where people could take it back. It took a month or two before I truly felt safe, and by that time, the initial excitement had passed.”

It was also sinking in that his team had even higher expectations to deliver now that outside investors were onboard. To blow off a little steam, he bought a Lamborghini and drove it for six months — checking off a childhood dream — before selling it. “Why did I sell it? Minnesota is a terrible state for a Lambo for obvious reasons.”

What about giving back? “I made a number of investments locally, worked with Techstars for a season, and I continue to work informally with several entrepreneurs,” Coopet said. (One such startup example is Branch, one of our portfolio companies.) “The best part has been learning how to advise as opposed to telling people what to do, which is a bad habit of mine. Learning to cultivate someone else’s ideas and vision instead of imposing my own might be a greater value than what I am providing — so perhaps that’s not truly paying it forward!”

I’m sure we’ll be hearing more about Mitch making an impact in the startup community. He’s one of the most respected developers in Minnesota.


Beer Signs, a Lake View and Paying It Forward

So what about me, you might ask? I have also been blessed with startups that have exited.

My favorite thing after exiting my most recent startup was buying a cabin in Crosslake, Minnesota. Throughout my childhood and adult life, I’ve always enjoyed spending time at other peoples’ cabins. The exit proceeds provided me the ability to acquire my dream cabin on the Whitefish Chain, where several friends already had their own. You can ask my wife, Jessi — literally the only décor I helped with when we acquired our cabin was collecting a couple of vintage, top-condition Hamm’s motion beer signs, which took quite a while to find. They remind me of my grandfathers — who each had these during my childhood — and my family’s humble beginnings.

But I had a very early startup experience too. The first website I created with my twin brother and business partner, Ryan, was a sports card classified website called, which we built in the 1996–98 era while we were both in high school and junior college. We spent more money on it than we earned at the time ($2,500), but we managed to get it to 2,000 visitors a day and started making some money. Several years later, after realizing some liquidity from our prior operating business, we bought a few top-graded cards that we had dreamed of as kids. Fast forward just four years later, and one of those cards had an estimated value 50 times what we paid for it!

But it isn’t all just fun and games. As a founder who has had success early in my career and who came from humble upbringings, I, like many founders, feel it is my moral obligation to be a force for positive change, and pay it forward. The ultimate pay-it-forward initiative for myself and Ryan was starting a Midwest-focused VC fund called Great North Labs in 2017. Pooling our capital and experience with other successful operators to support founders to big exits has been personally rewarding. Plus, watching the economic impact of these investments ripple out into communities and the region is truly great.

In the way of more philanthropic activity, Ryan and I have made a number of cash and equity donations that were funded by our exit proceeds. We target initiatives that are really executing in the tech and startup ecosystem, then promote these efforts through our Founders Pledge to gain more support, and also pledge part of our General Partnership’s interest from our fund to nonprofits.

Through my early investment activities in our region, and through my philanthropy efforts, it is my hope that when people look back at my career, they will remember me for being a positive force for civic change to ensure we have a bright future full of innovation and prosperity for all.

One thing I know: We have many founders in the Midwest who know how to execute. Insights on how to scale high-growth companies — experience and know-how that was previously guarded within niche communities in places like Silicon Valley — have never before been more widely available to founders who have the ambition to pursue their visions. Ryan and I look forward to many, many more great founder success stories in the coming years. Happy hustle, enjoy the rewards, and don’t forget to give back to the community that gave to you!

Read More About Investments + Exits5 Tips for Seed Funding Success

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Special thanks to Julie Novack of Chicago’s PartySlate, one of our portfolio companies, for her help in connecting us with Kristi Ross.

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