Ask HN: Why don't VCs just "suck it up" and pay founders a competitive salary?

I came here to make the same comment. If you’re founding a company and it’s a fantastic investment opportunity, nobody will have any problem with you paying yourself a great salary. If the opportunity is less great, then they may take issue with their money being used to pay the founder so much money. The optics of a high founder salary in any case are poor; investors view your founder equity as a major component of your compensation and they want you to be somewhat hungry for success rather than being satisfied with your base pay.

If your startup is a few years old and you’re looking to make more cash, I suggest negotiating a bonus package with your board of up to 100% of your base salary. If you hit targets, few investors will argue with paying the founder a decent bonus.

> I may be mistaken, but I've never heard of a VC dictating salaries.

We don't exactly (Boards are a thing) but we do give recommendations of decent salary ranges, but then again, serious founders are not going to ask to get paid a Director at Google's salary when they're the CEO of a 5-6 person startup.

Technically, after your first priced round, you'll have a board; you probably control it, but perhaps not after your second round. The board will approve a headcount plan, with implied costs.

Realistically the management team (the operators, not the investors) do control most of this.

The subtext of the question though isn't why operators don't increase comp; it's why investors don't kick in enough to let startups compete with comp packages from FAANGs.

(I think the answer is: it's because most startups fail.)

Startups are unproven ideas.

MAANG companies are proven businesses.

Lots of people would say "Yes! I shall pretend to work on establishing a viable business if you throw scads of money at me!" And not ever really develop a viable business.

Founders get rich by having equity. Some of them get stinking rich.

It's basically a form of betting that incentivizes actually succeeding at finding a viable business model. That's the only way that makes sense. Otherwise you are paying people to pretend to work.

The "pretending to work" issue gets talked about a fair amount. People attend conferences because it feels like work. People rent offices and set up business bank accounts because it feels like work. Etc.

Real work involves solving a real problem and getting people to pay you for it.

That doesn't automatically happen because people call themselves "founders" and invent a business name etc.

"Most startups that COULD exist are never actually started because the founders want to be making higher salaries working at Google/Microsoft/Meta/etc."

Sorry but I disagree. People who start startups are people who don't care that much about making more at a larger company. They do startups because they hate doing what they are doing and want to create something of their own or solve a real problem that no one solved it for them.

If I was a VC and someone wanted me to invest in their "idea" but only if they get paid the same salary they make/could make at a FAANG, I wouldn't trust that founder. Just doesn't work that way. The point of startup is that it is hard and you still want it bad.

Honestly, if you start throwing money like that, it will attract the wrong types or the "Wantrepreneurs". My 2 cents. Feel free to disagree and counter.