Keeping funds within the company means swifter profitability, demonstrates discipline, shows an “all in it together” mentality, and an ability to focus on their product and services rather than fundraising.
This is all the more important in the early stages because you need to give away a lot of equity for the money you raise. Series A is typically 10% and that only grows with more investment. The lower your expenses, the longer the run rate, and the better it is for you, your co-founders and your business.
Of course, “pay yourself just enough to not think about money” has as many answers as there are founders. The compensation needs and expectations of a founder straight out of university with no dependents, versus one who’s come from a big bank and has three kids, will be very different.
So use your investors as a sounding board. This research and our Compensation Calculator provide a good benchmark and a starting point for this conversation. Your investors and talent partners can then help you navigate the nuance of your particular situation, providing the necessary distance and context, sharing information about the space in which you and your business are operating, and what they’ve seen with other portfolio companies. They will help you figure out what you and your business actually need to get through the next stage of growth and hit the milestones successfully.