Discussing your salary as a startup founder or CEO with a venture capital (VC) firm is an awkward and delicate conversation that many founders dread. That said, normalizing conversations around founder compensation with investors is crucial for aligning long-term interests and ensuring sustainable growth. While founders must accept financial risk in the early stages, a good investor recognizes the importance of fair compensation to cover basic living expenses and maintain motivation, striking a delicate balance between founder sacrifice and appropriate rewards as the business develops. You’ll need careful timing, thorough preparation, and a plan to demonstrate that your needs and the investors’ expectations align. So, how can you approach this topic effectively?
Timing the salary discussion
So when do you bring up your salary with your VCs? Here are some timing tips.
- Before closing the funding round: Ideally, founders should discuss their compensation during or shortly after fundraising negotiations when financial plans and budgets are being finalized. This establishes transparency and avoids springing any surprises on your VCs later.
- Not too early: You don’t want to bring up your salary expectations too early in the process, like during initial VC meetings. Early conversations should focus on your business model, growth potential, and vision. Salary discussions fit better during later-stage discussions when conducting due diligence or budget planning.
- Tied to milestones: Some founders choose to tie any salary increases to specific company milestones, such as achieving revenue targets or securing subsequent funding rounds. This demonstrates your commitment and aligns your pay with the company’s growth.
Preparing for the discussion
You’ll need to arm yourself with facts before discussing salary with VCs. Fortunately, we’ve got some resources that will help you.
- Research market benchmarks: You’ll need to know typical CEO salaries for startups at similar stages (e.g., pre-seed, seed, Series A). For example, seed-stage CEO salaries averaged $132,000 in 2024. Kruze Consulting’s Startup CEO Salary Report can provide data on what other startup CEOs are earning.
- Assess your personal needs. Calculate your minimum viable salary – enough to cover your living expenses without creating undue financial stress but not so large that your VCs will balk. Asking for too much could suggest your priorities aren’t aligned with your VCs.
- Develop financial models: Present a clear financial model that includes your proposed salary as part of your startup’s overall budget. You want to show that your compensation fits into your company’s financial plan. Our guide to creating a financial model can help you with information and templates.
- Make your case: Be ready to address how your requested salary matches industry standards (sometimes non-technical founders may ask for less than technical founders). Show how your requested salary reflects your contributions to the company’s success. Highlight your role in driving growth and managing risks.
If this process sounds familiar, that’s because it probably is. If you’ve ever negotiated a job offer, you’ve gone through most of these steps (except for the financial model, which is why we created our financial planning guide).
How to broach the subject of CEO salary
When discussing salary with VCs, approach the conversation strategically:
- Frame it within financial planning: Introduce your salary as part of broader financial discussions. For example, during budget reviews or when presenting projections, include your compensation as one line item among many. That lets you bring up the topic within the larger context of your overall budget.
- Communicate transparently: Be ready to discuss your salary needs and rationale. Explain how your salary supports your ability to focus on growing the company without personal financial distractions.
- Acknowledge any trade-offs: Highlight any trade-offs you’re willing to make, such as tying increases to performance milestones or accepting lower cash compensation in exchange for equity. Be careful about equity, though – remember, you’ve got bills to pay now, and equity can’t be easily converted to cash if you need it.
- Talk it through. Encourage open communication by inviting feedback from your VCs. This helps build trust and ensures you and your investors agree on expectations.
Tips for successful salary negotiation
Even with all your preparation, your VCs may want to discuss your salary expectations. Some methods to smooth the discussion include:
- Be reasonable. Avoid setting unrealistic salary expectations, which can raise red flags for investors concerned about cash burn. If you’ve done your research, you’ll know a reasonable figure to aim for. You can use our Startup CEO Salary Calculator to get an idea of what you should be earning.
- Focus on value creation. Emphasize the unique value you bring to the company and your specific impact on the startup’s success.
- Highlight your alignment with company goals. Show how your proposed salary supports long-term business objectives rather than personal gain.
- Be flexible. If VCs push back on cash compensation, consider negotiating for alternative benefits like equity, bonuses tied to performance, or accelerated vesting schedules. Again, though, remember your minimum viable salary. You don’t want to be forced to borrow money or use your retirement savings to pay your bills!
- Document agreements. Any agreed-upon compensation terms should be documented clearly in writing to avoid misunderstandings later.
Be confident and professional
Discussing your salary with VCs means balancing your personal financial needs with the company’s financial health and your investors’ expectations. By preparing thoroughly, choosing the right timing, and communicating transparently, founders can navigate this conversation successfully while maintaining strong relationships with their investors.
