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Founder's Salary?

Is it considered normal to pay oneself -- as Founder -- enough to cover cost-of-living when seeking Seed Funding? I understand expectations for Series A round.

19 Replies

Daniel Myers
1
1
Daniel Myers Entrepreneur
Founder at Flair, Bayesian, Hacker
I have seen founders do all sorts of things. I think it depends on whether or not you have enough in the bank to make it to the next milestone and funding.
Kate Murphy
1
0
Kate Murphy Entrepreneur
Hustler at Hustle Con

http://members.founderdating.com/discuss/2248/How-do-Investors-Look-Upon-Founder-Salaries

Check out this discussion. It's always super helpful to do a search beforehand. There is a lot of great content on the site.
David Still
2
1
David Still Advisor
Founder of Start-ups, Entrepreneur, Financier and Advisor
Yes.
Arash Rajaeeyan
3
2
Arash Rajaeeyan Advisor
Senior Software Engineer Manager at Capital One
if I was an investor,and some one was not putting that in their plan,I would be sure they can't continue and the plan is not real !you should include all costs that will occur and may occur, it is ok to be optimistic but stay realistic!
Bill Warner
4
0
Bill Warner Entrepreneur
Managing Partner of Paladin and Associates
It certainly is normal and needed to pay oneself. Investors want to know that you can sustain yourself, but no frills beyond that. We don't want the founder to be worrying about paying the bills but would frown on you needing a Lexus or a vacation in Hawaii at this point in your business.
Scott McGregor
5
0
Scott McGregor Entrepreneur • Advisor
Advisor, co-founder, consultant and part time executive to Tech Start-ups. Based in Silicon Valley.
It depends. Professional investors are generally very pragmatic. They don't want you to get rich on a salary, they want you focus on building the value of your equity (and theirs). But,they don't want you distracted by problems paying your bills. Angel investors who have never been entrepreneurs may be less pragmatic, often to their own disadvantage. I've seen examples where tight fisted investors have hamstrung company founders living on shoe-strings, who could have led a company that might have taken off like a rocket, but instead wound up invested in a "hobby" company without any full time people.
Andrew Holmes
1
0
Andrew Holmes Entrepreneur
Data scientist, coder, investor
I think it would depend on the age and background of the founder. For a young founder without family money there's no way they could reasonably afford to work full time on the project without a salary. However, I've heard founders try to justify high salaries in the past based on what they could earn working for a large company instead - I wouldn't personally want to invest in someone who took this view.
Luis Eduardo Trujillo
0
0
Luis Eduardo Trujillo Entrepreneur
CEO en Medynfo
From my point of view it depends on your cash flow, role, objectives and results,. Employees are evaluated depending on their results. If there is somebody in the market who can fulfill your role, less expensive and committed then you should hire this person. If not then you can be the appropriate person.
Mark Stephenson
0
0
Mark Stephenson Advisor
Head of Technology and Delivery at evvnt
This all depends on stage of company, in my opinion. If you are just starting off then you should pay yourself as little as possible in order to keep lights on and eat. As the company grows and becomes profitable you should always try to maintain a low cost base but you should also recognise that your position holds value. If you had to hire in a replacement for yourself (or the board had to) how much would it cost? It makes sense to have that amount in your plan. If you are a megastar CEO or CTO etc and your contribution has accelerated the growth of the company to huge profits then the company needs to give you enough to keep it interesting and not feel the need to supplement with external revenues. Speak with investors directly - they shouldnt be there as a one off pitch and grab, they are there to advise - typically theyve seen it all before.. use them.
Andrew Holmes
0
0
Andrew Holmes Entrepreneur
Data scientist, coder, investor
I don't think a founder with 70% of the equity can expect the same salary as a CEO hired in to do the job with only 5% options. Investors are likely to want the founder incentivised by an exit, not commercial-level salary.
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