Finance · Startup

Salary/Financial Compensation for Co-Founders

Tri R.A. Wibowo Full Stack Developer; Javascript Fanatic

September 29th, 2017

So I've joined in a startup for less than two years as the co-founder with no salary. We've got some traction and things have been quite good which make me wonder if it's already time to ask for a financial compensation. We're still bootstrapping with the CEO's own funds, though.

Is it right for me to ask for such thing in our current condition?

Andrew Dubar Cofounder - Wideline

Last updated on September 30th, 2017

I believe it depends upon your revenue and associated profit. If the current CEO has paid the way thus far, my questions would be - has the CEO begun to be reimbursed?

What is your equity share? How much do you bring to the overall revenue? Is anyone else being compensated? If so, what is their contribution and function? What is their value to the enterprises compared to yourself and others equally not drawing a salary in the organization?

Ideally you are in an equitable partnership situation and timing of drawing salaries should be a decision between the group of founders with consideration for any investor impacts (bottom line).

I personally have experienced bounced pay checks in what eventually became a company that led its own industry in innovation and yes, profit. We might have entered into salary a little later than we did. Hindsight is 20/20.

A question for yourself personally is - do you feel your time and effort is being taken advantage of? Are your finances taking a hit?

Bootstrapping often takes super human effort and self discipline. Don't let the CEO co founder take all the financial risk. If he/she currently is, and is not drawing a salary themselves - look at the numbers. Can salaries be sustained?

Also, do you contribute directly to revenues? What is the CEO getting out of it?

Pay the revenue generators first.

In manufacturing, we made sure to pay the line workers well first before ever drawing a salary ourselves. Without them, we had no products.

In any event you and your fellow co founders need to have it all down by the numbers and take the time to discuss what is a significant step in your company's life.

The more you can keep operating capital in your business at the beginning the more control you will have psychologically when you are far into the black.

brighton chuma

September 29th, 2017

yes, it is okay to ask for a salary now since the company has started making a profit.

David M

September 29th, 2017

Depends on what the original agreement specified.

George Nuridzhanyan BI, UX, AI, YMCA (three truths and a lie)

September 29th, 2017

Only you can answer that, because right implies some set of rules, and this seems like a principles question, a thing that's pretty individual. A good heuristic to use is if you can think of more than 1 reason to do it, then don't do it. "Obvious decisions (robust to error) require no more than a single reason." (N.N. Taleb "Antifragile")

Thanash Kumar Entrepreneur, idealogist, loves to build from scratch and motivator

September 29th, 2017

well discuss regarding it but until your self sufficient without the CEO's Fund it is not advisable as your not making enough profit.. But lets discuss this. Message me.