Founder Salaries and Stock Vesting - Startups 101

15 Nov 2023 (1 year ago)

(0s) Founders, Stock Vesting, and Salaries in Startups

Setting clear founder agreements on equity and salary is critical in startups.
The storyteller faced hardships due to lack of salary definition, accumulating significant credit card debt.
Equitable stock distribution is advised unless additional value (e.g., traction, funding) by one founder justifies imbalance.
Vesting agreements protect remaining founders if one leaves early, usually with a 12-month cliff and 4-year vesting term.
The importance of filing an 83(b) election in the US is highlighted to avoid tax complications.

Salary agreements define compensation to accommodate founders' varying personal circumstances.
In the case of no initial funding, founders might still have side jobs or projects.
At Slidebean, founders started with equal salaries, adjusted cash flow priorities accordingly, and treated consulting projects as company revenue.
Setting a cap on the time founders can go without a salary and establishing the salary's priority in cash flow is important.
Drafting, signing, and committing to a written agreement, even if not legally vetted, is recommended.

Salaries should be based on realistic company affordability and may be adjusted for cost of living differences.
Founders' personal funds should be treated as investments, with fair stock compensation, rather than covering unequal salaries.
Openness in founder relationships is essential to navigate changes, such as the storyteller becoming a father shortly after starting a business.
Viewers are encouraged to share their experiences with founder equity distribution for community learning.

The creator appreciates feedback and shared experiences.
The video production is costly and time-intensive, with requests to share the content and try out the AI-presentation platform.