Figuring out your own salary as a founder is one of the trickiest financial decisions you’ll make. Pay yourself too little, and you risk burnout. Pay yourself too much, and investors might raise an eyebrow. So, where’s the sweet spot?
Let’s break it down – how to set your salary, what investors expect, and how to strike a balance that works for both you and your startup.
Why Investors Care About Founder Salaries
IInvestors get it – you need to pay rent, eat, and actually survive while building your company. But they also want to make sure your salary isn’t draining the business or signalling a lack of commitment.
Here’s what they’re really thinking when they look at your pay:
- Is this salary reasonable for the stage of the company?
- Does it show the founder is focused on long-term growth?
- Is there a balance between salary and equity incentives?
If you can answer these confidently, you’re on the right track.
How Much Should a Founder Pay Themselves?
The right number depends on your funding stage, revenue, and business model. Here’s a rough guide:
| Startup Stage | Typical Founder Salary |
|---|---|
| Bootstrapped / Pre-Seed | £0 – £40K (often minimal or living expenses only) |
| Seed Stage | £40K – £80K (modest salary to cover basic needs) |
| Series A+ | £80K – £150K (competitive but reasonable) |
| Growth Stage | £150K+ (aligning with market rates) |
Bootstrapped Founders: Many early-stage founders take little or no salary, covering costs through personal savings, side gigs, or consulting. If that’s you, just make sure you have a plan for when you’ll start paying yourself – running on fumes isn’t sustainable forever.
Seed-Stage Startups: Once you’ve raised a seed round, investors expect you to take a reasonable salary – enough to focus 100% on the business without personal financial stress.
Series A and Beyond: As revenue grows and you raise larger rounds, salaries increase, but they still need to stay within reason. If you’re paying yourself more than senior hires, that’s a red flag.
How to Justify Your Salary to Investors
Investors don’t expect founders to work for free, but they do expect financial discipline. Here’s how to frame your salary so it reassures them:
1. Tie It to Your Startup’s Progress
Instead of just picking a number, link your pay to growth goals:
💬 “We’re keeping founder salaries at £50K until we hit £1M ARR, at which point we’ll review compensation.”
This shows investors that your focus is growth, not just personal income.
2. Keep It Modest and Market-Driven
Investors expect you to research what other founders in similar industries and funding stages are earning. If your salary is way above the norm, they’ll ask why.
3. Show That You’re Balanced
Most of your financial upside should come from equity, not salary. If you have a strong equity stake and a modest salary, investors will be more comfortable funding you.
Other Ways to Structure Founder Compensation
If cash is tight or you want to align incentives with growth, there are other ways to structure your pay:
✅ Lower salary + more equity – Some founders take a smaller salary in exchange for more shares or stock options.
✅ Performance-based increases – Set a lower salary now with planned raises tied to revenue milestones.
✅ Deferred compensation – Agree to take a lower salary now and increase it when cash flow allows. Just don’t defer too much—unpaid founders tend to burn out.
What NOT to Do When Setting Your Salary
❌ Don’t Take Too Much, Too Soon
If you’re pre-revenue and taking a six-figure salary, investors will worry about how you manage money.
❌ Don’t Take Too Little for Too Long
Paying yourself nothing might look “lean,” but long-term, it’s unsustainable. If you’re stressed about personal finances, it affects decision-making.
❌ Don’t Ignore Market Benchmarks
If your salary is dramatically different from other founders at the same stage, investors will ask why. Research what’s normal in your industry to justify your number.
The Bottom Line: Pay Yourself Fairly Without Scaring Investors
Your salary should make sense for both you and your investors. It should:
✅ Cover your basic needs without putting strain on the business
✅ Align with your startup’s stage and cash flow
✅ Leave enough capital in the business to keep growing
If you can show investors that you’re balancing financial sustainability with startup success, you’ll earn their trust – and their investment.
Need help structuring founder pay? At Standard Ledger, we help startups navigate financial strategy, fundraising, and investor expectations – without the headaches. Let’s chat. 🚀
