Entrepreneur
Then there’s the old-school mentality among some investors that founders should “stay hungry,” implying modest compensation is necessary to stay driven. Let’s be real. Running a startup is a grueling job, and founders deserve to be compensated justly for their efforts.
Compensation can be a tricky subject, especially for investor-backed founders. Yet, it’s a topic that too often gets pushed aside. Studies have indicated that startup founders, on average, take home up to 20% less in cash compensation than non-founders in comparable corporate roles.
Startup founders earned an average of $150,000 in 2022, significantly less than private company CEOs, who averaged $377,850. This stark gap highlights just how undervalued founders can be, even while shouldering the immense responsibility of building and scaling their companies. Interestingly, technical and product founders tend to earn more (around $155,000) versus their CEO counterparts (approx. $142,000). However, some founders forego pay altogether, a trend that increased from 7% in 2023 to 9% in 2024, according to the Pilot Founder Salary Report.
This is especially true for early-stage startups, which often lack structure such as compensation committees. In such cases, founder pay can easily get neglected, particularly as lead investors get stretched thin serving on multiple boards and making new investments. So if you don’t advocate for yourself, who else will?
As a former founder and investor who now sits on several company boards, I’ve made it a priority to address founder compensation early on. I’ve seen how neglecting this issue can lead to burnout and resentment, ultimately affecting both the founder and the company. Here’s how you can champion the topic of your compensation and yet do it in a diplomatic way.
Related: Founders’ Salaries Are Shockingly Humble, New Report Finds
Approach the conversation strategically
When it comes to discussing your compensation, tread carefully — you don’t want to risk being seen as greedy and self-serving. Many founders face pressure from antiquated industry norms that glorify under-compensation. Some investors believe that CEO pay correlates with greater startup success, perpetuating the notion that “the lower the CEO salary, the more likely it is to succeed.” While this idea of “staying hungry” might resonate with some, for many founders, balancing personal and professional obligations makes fair compensation a critical factor in maintaining motivation and preventing burnout.
One way to approach this is to start by addressing the broader executive compensation package for your team. Solicit the board’s input for current and future key hires. Once that’s on the table, you can transition into asking the board how they view your executive compensation in the context of the overall team.
Framing your compensation as part of a larger board process rather than a personal ask makes it less self-serving and more about the company as a whole. If there are also personal circumstances that are distracting you from your role, such as rising living costs or health issues, be sure to mention them so your board can understand your full picture.
Be prepared and methodical
Once you’re ready to approach your board, be organized. When coaching founders on boards I serve on, I always tell them to prepare data that will help me advocate on their behalf. For example, you can show your board surveys or market data that highlight what others in similar roles are earning. If your pay is below market, it’s an easy case to justify a raise.
If you’re unsure where to start, tools like Christoph Janz’s salary calculator can help. For example, a San Francisco-based founder with two kids who has raised a $5 million Series A might be suited for around $150,000 in annual compensation; meanwhile, for a Berlin-based founder with no kids and a $2 million seed round, $50,000 might be a more realistic average. By demonstrating how your proposed salary aligns with factors such as company stage, location and family obligations, you can make a stronger case for fair compensation.
Giving them detailed cap tables with pro forma calculations can also help them understand how increasing your equity impacts other stakeholders including themselves.
Related: 4 Expert-Backed Tips to Negotiate a Raise or Promotion
Don’t overlook equity
Equity is another frequently understated aspect of compensation. Many founders have fully vested their stock after four years and find themselves with nothing left to earn. If there are no additional equity or top-up grants, your motivation could drop, especially as your ownership dilutes over time through new funding rounds and issuing options to new employees.
At Vungle, I received several equity grants that helped keep me motivated. Some of these grants were designed to protect my stake, particularly as we raised $25 million across multiple funding rounds. Without these grants, my equity would have been diluted significantly.
If you’re nearing the end of your vesting schedule and haven’t secured any new grants, it’s time to let the board know so they can discuss giving you more equity. It’s also an opportune moment to ask the board for “single-trigger acceleration,” which allows you to fully vest new equity if the company is sold. This can give you greater negotiating power in the event of an acquisition by a larger company. Some boards may be averse to this but the economic impact on your net worth can be substantial if it’s granted so it’s worth asking.
Related: The Ultimate Guide to Equity Compensation
Time the topic correctly and bring in advocates
The best opportunity to bring up compensation is during year-end planning cycles. The board is already focused on budgets, performance targets and strategy for the upcoming year, making it a natural moment to address pay. I like to work with founders on creating a board-approved annual plan and then relating the founder bonus to the achievement of this plan. For instance, if you hit base goals, you might secure a 20% bonus, while exceeding targets could unlock a 40% bonus. Just remember to cap those bonuses. Founders should be incentivized, not compensated like a sales team.
Finally, it’s important to be humble and diplomatic when discussing compensation. Always express gratitude for what you’re given, and avoid any sense of entitlement. But more importantly, don’t go it alone. My best advice? Bring an advocate onto your board, whether that’s an independent board member or a VC who is sympathetic to your personal goals, so you don’t have to be the one constantly pushing for your own compensation.
If you have a smaller board, you’ll likely need to support your own case. But if there are multiple VCs, find one who can champion your cause. Ideally, ask the board to create a compensation committee. That way, there’s a formal process in place to ensure you are compensated appropriately.
Related: How to Build an Advisory Board That Drives Startup Success
At the end of the day, advocating for your compensation is about ensuring fairness — for you and for the future of your company. And while humility is crucial, it’s also important not to downplay the importance of fair compensation. A motivated founder is essential to a startup’s success, so advocating for your pay is about alignment, not indulgence.
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