At what stage of startup do founders make money?
Planning for a startup. Need this info so I can plan and quit my job. Will I be able to draw salary after the first round of funding or do I need to survive on my savings until series B?
You can either draw a salary at profitability or continue to grow your business... your choice.
Some founders take a salary. From what I’ve read from Peter Thiel, it should be below $150K. I imagine that is also with the Bay Area in mind so you’ll probably want to take less than that if you’re somewhere with really small COL. That way, you can use that to pay for Talent and grow the business. Founders are usually going to get the big $ once the business is sold or it goes to IPO.
If it's vc funded, you can start drawing salary right after the first round comes through.
When the company starts making money and or growth is so outrageous you get a funding bonus at each capital raise.
^ This is common. Helps keep founders from making irrational financial decisions and focused on big exits.
There's a great book called the hard things of hard things by Ben horowitz that tells you when you're supposed to draw a salary. Done mostly to help you make more rationale decisions and not be forced to sell
As a former founder with an exit behind me, I will tell you straight up you shouldn’t do it if you’re asking this question.
100% agree with this. you are fucked from day 1 if you are doing it to make money. 99% chance your stock is worth 0.
I am not doing this for the money. But I need to plan how much savings to keep before I quit my job and venture into something with no income.
IPO
Or buyout, which is more likely