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by menaerus 487 days ago
Are there investors who wouldn't agree to pay the founders a wage?

I understand the part where you invest your time and money to build the PoC but I can't imagine running a startup with VC-backed investment without paying out myself a wage. That seems crazy to me if true.
2 comments
rcxdude 487 days ago
Equity is compensation, just illiquid, risky compensation. If you're wanting to get a wage (liquid, low-risk compensation) as well, expect to trade it against equity (which will naturally happen: if you're a founder being paid a wage, you're being paid it with the VC money which you have gotten by giving them some of your equity for some small fraction of what you expect the equity to be worth if you succeed). If you believe in the company (or at least rate the chances of success as more than the VCs do), it's rational to minimise the amount you trade away in equity for short-term needs or risk-reduction.
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matt-p 487 days ago
Very few VCs would not agree to a wage if the founder needed it. It probably wouldn't be as high as market rate though.

If you've got an independently weathly founder then both parties typically prefer equity only.

Traditional seed investors may not agree anything beyond minimum wage. It depends though.

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menaerus 487 days ago
Sounds like a nightmare and a good way to go into personal bankruptcy. Unless, I guess, you had a job where you accumulated ~M of savings, which is very very few people.
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matt-p 487 days ago
Sure, but in some cases it's also a great way to become very very wealthy.

It entirely depends on your personality and circumstances, it's certainly not for everyone.

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menaerus 487 days ago
> Sure, but in some cases it's also a great way to become very very wealthy.

In very very very few cases, sure. Also, the wealth isn't the only or at least not the biggest motivator for many people trying to build their startups. But I get it - my money my rules disguised under show me how motivated you are to carry this through.

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matt-p 487 days ago
Sure, agreed though a larger percentage of VC funded startups exit than you probably think. Those "90% fail" stats are made up mostly by people who got traditional angel investment or no investment at all.

I'm just saying there's two sides to the coin, that's all.

I think there's a very genuine element of 'show me how motivated you are' you also cannot expect to get a normal standard rate company salary when you own most of the equity and aren't profitable. I think it's reasonable on balance.

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menaerus 487 days ago
No, that's only about the leverage - a perfect instrument to create even more pressure. Everything else I call a BS, sorry. Aren't founders already taking a huge leap by admitting themselves to work probably as much as ~10x more, with of course reciprocal amount of stress, and then you say it's reasonable that founders wouldn't be motivated enough unless they did all of that but for under the market rate? They left their job, they have the idea, they have the people, they have the drive ... and they want to execute it. I just hope not all investments work this way - this would be really sad.
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