Most Startup Founders Pay Themselves This Totally Reasonable Salary
Career research company 80,000 Hours estimates that founders going through the Y Combinator accelerator program pay themselves about $50,000. If they go on to raise more money, that salary can double. If the startup flops, $50,000 could be the highest salary a founder makes.
"During the Y Combinator program, they use only a one-off seed investment from Y Combinator of US$120,000 to pay living and business expenses," 8,000 Hours' Ryan Carey writes. The investment is expected to cover everything, including a small salary for the founder. "If they go on to receive angel investment [they] can pay themselves about $50,000 per year. With venture capital funding, this tends to increase to about US$100,000 per year."
The most successful Y Combinator founders can make much, much more. Carey estimates that the founding teams of Dropbox and Airbnb are worth $6 billion combined, for example.
Carey's salary estimates for early-stage startups up with a Quora post on a similar topic. A founder who raised $500,000 used the Q&A site to ask, "Is a $100K salary too much for an angel/VC-backed startup co-founder?"
Foundry Group's Brad Feld thought a six-figure salary was too high for an early entrepreneur. Another person agreed, stating that while $100,000 is below what an engineer should make, it's "
The general consensus seemed to be that a $50-$75,000 salary was reasonable. "$50K/year is plenty. Some families live on that," says VC Sean Owen.
David Rose agrees. "In my experience, that fact pattern (a pair of founders, $500K seed round) would typically see them each taking $50-$75K, at least until they either start generating revenue, or raise a larger round."
When you're profitable, you can start paying yourself a more impressive salary.
Here's the most voted up response by Michael Wolfe, a four-time entrepreneur:
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