Founder Compensation: A Founder''s Guide to Salary, Equity Splits, and Vesting That Survive the Next Round
Two conversations decide whether a founding team makes it to Series A: how you split the equity and what you pay yourselves. Both are awkward, both are usually rushed, and both compound for a decade.
Once you have raised institutional money, there is a rough salary band VCs expect founders to sit in. It is lower than market for the role and it is deliberate.
Pre-seed / bootstrap: $0 to $60K. Whatever the business can afford. Most founders pay themselves nothing until the first check clears.
Seed (after ~$1.5M raise): $90K–$130K in high-cost cities, $70K–$110K elsewhere.
1. All founders get the same salary. Different salaries are one of the fastest ways to poison a founding team. The equity split does the differentiation. 2. You are paying yourself to remove distraction, not to be rich. Enough to cover rent, health insurance, childcare. Not enough to buy a nicer car.
If you take a salary meaningfully above the band, sophisticated investors will price it in during diligence. It signals two things: you are optimizing for personal cash and you may not need the next round as urgently as you say.
If a founder has real obligations (dependents, medical, primary breadwinner), take the salary you need to not be desperate. Discuss it with the board, put it in writing, do not hide it. Investors are much more forgiving of a founder who explains than of one they discover.
The default answer for a two- or three-person team is equal splits, or something very close to it (55/45, 40/30/30).
You do not know today which co-founder will end up carrying the company two years from now.
Small differences in the split (10 vs. 15 percentage points) look enormous in year one and irrelevant at exit.
The person on the short end of a very unequal split will resent it exactly when the company needs them most — during the hardest 18 months.
One founder had the idea, quit their job first, self-funded for a year, or is bringing an existing customer/technology. That is real.
Split the difference: adjust by 5–15 points to reflect real asymmetry, not 30–50.
Two frameworks produce splits that survive scrutiny at the next board meeting:
Each founder's contribution (time, cash, IP, referral) is scored in a spreadsheet. The percentages emerge from the scoring. Best when the team is genuinely asymmetric.
Sit down with the co-founders in a room. No spreadsheets. Answer three questions:
Then pick a number that everyone can live with on their worst day. Not their best day.
If you cannot get to a number in one long dinner, you have a co-founder problem, not an equity problem.
50/50 with no CEO. Two co-founders, exact split, no tie-breaker. Every hard decision becomes a stalemate. Pick a CEO before the split, not after.
Late co-founder bonus. Bringing on a "co-founder" three months in at 40%. They are not a co-founder. They are an early employee. Grant them 3–7% and title them appropriately.
Under-granting the technical co-founder. In a technical-heavy company, the person writing the code is not "the CTO," they are the reason the company exists. Skewing toward the business co-founder because they raised the round is short-sighted.
Every founder — including the CEO — vests over four years, with a one-year cliff. This is non-negotiable in any institutional round and it is the right structure even without investors.
One-year cliff: If a co-founder leaves in the first year, they get zero shares. Zero.
Monthly vesting after the cliff: 1/48 of the total grant vests each month.
The single most preventable founder disaster is a co-founder who leaves in month 8 with 25% of the company because they had no vesting.
Single-trigger acceleration: on a change of control (acquisition), unvested shares vest. Rare, hard to get from investors, worth asking for founders and key early employees.
Double-trigger acceleration: on change of control and termination without cause within 12 months, unvested shares vest. Standard for founders and executives. Push for this in every term sheet.
At the term sheet, most investors will re-vest existing founder shares on a fresh four-year schedule, with partial credit for time already served. If you have been working on the company for 18 months and you are raising a Series A:
Standard landing: 25% vests at closing, remainder over 3 years.
Do not concede this. It is your leverage on the vesting math.
When a co-founder leaves — voluntarily or otherwise — the company (via the board) buys back the unvested shares at the original grant price (usually pennies). Vested shares are the departing founder's to keep.
Company repurchase right on termination-for-cause, at the lower of cost or fair market value.
Both are standard. Both save the company from a departing founder selling large blocks on secondary markets.
IP assignment (all IP the founders have created for the company belongs to the company).
This is a two-page document. A lawyer can draft it for a few thousand dollars. Founders who skip it because "we trust each other" pay ten to a hundred times that when the trust breaks down.
Every quarter, sit down with your co-founders — not in a meeting, not with a deck — and answer one question:
If we were re-doing the equity split today, knowing what we know now, would we do it the same way?
If the answer is no, do not adjust the equity. Adjust the conversation about it. Small resentments compound into cap-table battles at the worst possible moment (usually right before a term sheet).
