How Much Should Founders Pay Themselves? Setting a Founder's Salary
In the 1830s Charles Goodyear set out to turn rubber into a material that would not melt in the heat or crack in the cold, and he had no money to do it with. According to Philip G. Hubert's book Inventors, published in 1893, the hardware firm in which he had been a partner had left debts of USD 30,000; when Goodyear returned to Philadelphia he was arrested for debt, made to live within the prison limits, and began his experiments there at once.
In the years that followed he sold his furniture and placed his family in a boarding house. According to Wikipedia, the family at one point fed itself by catching frogs and digging half-frozen potatoes; two of his sons died as toddlers. Hubert writes that his neighbours pretended to lend him money while in fact keeping the family from starvation. Goodyear baked his compounds in his wife's bread oven.
In 1839, in Woburn, he found that rubber heated with sulphur turned firm. He received his patent on 15 June 1844. Then he took his work to the great exhibitions: a council medal at the London exhibition of 1851, a lavish "Vulcanite Court" at the Crystal Palace in Sydenham, a grand medal at the Paris exhibition of 1855. The costs of Paris sent him to debtors' prison in both England and France; he was made a knight of the Legion of Honour while in prison. When he died on 1 July 1860 his estate was in debt by almost USD 200,000.
Goodyear did not count this as a defeat. In the lines Wikipedia quotes, he wrote that the rewards of a life should not be measured only in dollars and cents. He had a point; but the price his family paid also shows that paying yourself nothing is not a virtue.
Why a founder's salary is a strategic decision
Many founders still think the way Goodyear did: I will take nothing until the company grows. According to a report published on 15 July 2026 by the accounting firm Pilot, 9.1% of founders in the United States paid themselves no salary at all in 2026, up from 5.4% in 2025. The same report puts the average founder salary in 2026 at USD 118,000.
The measure Pilot suggests is not a number but a condition: a founder should be paid enough to put all of their energy into making the company succeed. A founder who wakes up worrying about the rent spends that morning thinking about the bank balance, not the product.
How much should a founder be paid?
There is no single right number, but there is a way to reach the right one. Failory's guide to the founders' agreement treats pay as a clause of its own; the steps below come from that clause and from recent salary data.
Work out your personal floor first
According to Failory, founders will sooner or later need a salary that covers at least their basic living costs; those costs should be calculated and a fair figure agreed for both sides. Rent, bills, health cover, debt repayments: that total is your floor. A salary below the floor is not a saving. It is a postponed crisis.
Put the figure in the founders' agreement
If pay is never discussed between co-founders, one day it turns into quiet resentment. Failory suggests writing down the salary, how long you will work without one, and other benefits such as health insurance. This clause matters as much as the equity split; read it alongside how co-founders should split equity.
Tie the salary to your runway
According to a report by the advisory firm Kruze, based on payroll data from venture-backed US start-ups, the average salary of seed-stage CEOs in 2025 was USD 147,000; at Series A it rose to USD 203,000. Kruze stresses in the same report that pay always stays anchored to runway and monthly burn, and that a founder who has raised a small round should stay at the lower end of the range. Your figure should come from the money in the bank far more than from these averages.
Do not mix expenses with pay
When a founder pays for something on the company's behalf, that is not part of their salary. Failory suggests deciding at the outset who approves spending and how founders get reimbursed: for example, from the company account against receipts uploaded to a shared folder. That way it never becomes unclear who has lent the company how much.
Link any rise to a milestone
According to Failory, pay and other benefits can be tied to dates, financial thresholds or important achievements. Kruze's report also gives the investors' side: as a company closes stronger rounds, boards become more comfortable moving pay towards normal levels, while a founder paid well above the average is expected to justify it with valuation, traction and the money raised.
What the word wage hides
The Turkish word for wage, ücret, comes through Ottoman Turkish from the Arabic ujra, meaning rent, recompense and reward. According to Wiktionary, the verb from the root ʾ-j-r means both to reward and pay a recompense and to hire or rent out. A founder's salary is a little like that: you rent your own time to your own company, and when the rent goes unpaid it wears out both the tenant and the landlord.
That wear has a scientific name too. In a study by Mani, Mullainathan, Shafir and Zhao published in Science on 30 August 2013, the same farmers performed worse on cognitive tests before the harvest, when money was short, than after it. The researchers could not attribute this to time, nutrition or stress itself; their explanation was that money worries consume mental resources and leave less for other tasks. A founder who pays themselves nothing chips away, month by month, at the company's most valuable resource: their own attention.
A final word
In a letter written from Dublin on 5 April 1729 to his friend Bolingbroke, Jonathan Swift says he has no other notion of economy than that it is the parent of liberty and ease, and adds:
"I have made a maxim, that should be writ in letters of diamonds, that a wise man ought to have money in his head, but not in his heart."
Is your company's money in your head, or have you carried it into your heart by paying yourself nothing? And have you talked about it openly with your co-founder?
To see which bank balance your salary should be set against, Before the Cash Runs Out: How to Manage Runway and Burn Rate is worth a read.
