Founder Salary: How Much Should You Pay Yourself?
One of the most common founder questions—and there's no perfect answer. The right salary depends on your personal situation, company stage, and investor expectations. Here's how to think about it.
Salary Setting Principles
Before diving into numbers, understand the principles that should guide your decision. Founder salary isn't just about what you want—it signals to investors and employees. It's a key part of your overall founder personal finance strategy. A fractional CFO can help you structure compensation that works for you and your investors.
Core Principles
Sustainable, Not Lavish
Pay yourself enough to focus on the company without financial stress. Not enough to get rich before an exit.
Aligned Incentives
Your upside should come from equity, not salary. This alignment matters to investors and sets culture.
Stage Appropriate
Early stage demands sacrifice. Later stages allow market rates. Match salary to company maturity.
Defensible to Stakeholders
Can you explain this salary to your board? To your employees? If not, it's probably wrong.
The Investor Perspective
Investors want founders focused on building value, not extracting it. A founder paying themselves $500K at seed stage signals misalignment. Conversely, a founder so underpaid they're stressed about rent can't perform at their best.
Salary Benchmarks
These benchmarks reflect typical US founder CEO salaries. Adjust for your location, personal circumstances, and specific company situation.
Salary by Stage (2025-2026 Data)
| Stage | 25th Percentile | Median | 75th Percentile |
|---|---|---|---|
| Bootstrapped | $0 | $60K | $100K |
| Pre-seed | $60K | $90K | $120K |
| Seed | $100K | $125K | $150K |
| Series A | $140K | $175K | $225K |
| Series B | $175K | $225K | $300K |
| Series C+ | $225K | $300K | $400K+ |
Co-Founder Considerations
- Equal pay at start: Co-founders typically earn the same salary initially
- CEO premium later: As roles differentiate, CEO may earn 10-20% more
- Non-CEO founders: Usually 80-90% of CEO salary at same stage
Key Factors
Benchmarks are starting points. Several factors should push you above or below median.
Factors That Justify Higher Salary
- High cost of living area (SF, NYC, etc.)
- Family dependents (kids, spouse not working)
- Significant previous startup exits
- Company is profitable or near-profitable
- Board has approved higher compensation
Factors That Suggest Lower Salary
- Low cost of living area
- First-time founder without established track record
- Company has limited runway
- Personal savings or other income sources
- Early stage with unclear product-market fit
Raises Over Time
Plan to increase salary with each funding round. Starting at $100K seed and staying there through Series B looks odd. Natural progression shows the company (and compensation) maturing together.
Tax Optimization
How you structure compensation affects your tax burden. Salary creates ordinary income taxed at the highest rates. Consider the full picture, including how it interacts with your 83(b) election decisions.
Tax-Efficient Strategies
Max 401(k) Contributions
Contribute the maximum ($23,500 in 2025) to reduce taxable income. Company can match if profitable.
HSA Contributions
If using HDHP health plan, max HSA contributions for additional tax-advantaged savings.
Reasonable Salary for S-Corps
If you have significant distributions, salary must be 'reasonable' but doesn't need to be maximum.
Equity vs. Cash Mix
Additional compensation as equity may have better tax treatment than higher salary (with proper structure).
Common Salary Mistakes
- Setting it and forgetting: Review annually. As company grows, salary should evolve.
- Not discussing with board: Salary should be approved by board (or comp committee). Transparency matters.
- Comparing to market CEO pay: You're a startup founder with massive equity upside, not a hired CEO.
- Ignoring tax planning: Structure matters. Same gross comp can have very different after-tax outcomes.
Need Help With Founder Compensation?
Eagle Rock CFO helps founders structure compensation that works for them and their investors.
Get Started