The answer to this question is……. it ‘depends’.
In our portfolio we have a wide range of founder salaries – some are barely earning what a cleaner would make and some are far more generous.
As investors we are looking for alignment.
We don’t like to back lifestyle salaries but at the same time we do not want to see our founders suffer excessive hardship that ultimately would jeopardise the entire venture.
If a founder is raising a seed round he would need to minimise his own costs and extend the runaway as long as possible. Likely, he may be a young man or woman with few commitments.
Older founders with commitments such as mortgages and children can often negotiate a higher salary as sometimes this can be justified as they should have a decent track record as well as experience, which mitigates the risk in the business.
We have had founders tell us “but I’m taking a huge pay cut to do this startup, I’m really putting my neck on the line here!”
Well actually, you have the majority of the equity in the business. If you are fortunate to grow the business, raise additional capital or even generate notable revenues then these are all factors that can contribute to arguing for a higher salary at a later date.
The average salary for a startup founder is around £35k in London.