If you're in silicon valley, and want senior/lead engineers who can make a difference, expect to pay >>$10k per month per head for salary, benefits and payroll taxes. Plus give away a chunk of equity. Competition for good people is always fierce at all times.
Is ~50k/yr a typical founder salary? How much does it vary from this kind of number?
Re:Ask HN : Where Does VC Money Really Go?
by inmygarage on Sunday October 16, 2011 @05:32PM
(#3118362)
Founder salaries vary wildly depending on amount raised, whether the company is profitable or even generating revenue and the stage of the company. Some people pay themselves $1k/month and some pay themselves $15k/month. I figured $4k/month was a good benchmark based on a pre-series-A seed-financed tech startup that is generating minimal revenue and is not profitable.
Re:Ask HN : Where Does VC Money Really Go?
by nicholasreed on Sunday October 16, 2011 @07:53PM
(#3118693)
While mocking up salaries with an adviser, he said that we should earmark $60k for founders "so people think you're stable."
Re:Ask HN : Where Does VC Money Really Go?
by michaelochurch on Sunday October 16, 2011 @07:43PM
(#3118678)
Once there is a valuation and there has been investment, founders should be collecting close to full salary (maybe 75-85%) because to take less means they are effectively putting money into the business and should be getting more equity, but that can dicey because it dilutes investors.
$500k can't support 4 people for 12 months (in NY or CA) unless the founders have personal savings to use. You have to include travel expenses, a "cushion" in event of unexpected growth, and expenses incurred in getting the next round of funding.
For a typical $500K seed round, here is my breakdown for 12 months of expenses. Feedback welcome.
2 founders + health insurance + taxes = $10k/month
2 engineers + health insurance + taxes = $20k/month
1 p/t designer = $5k/month
...and you've burned through $420,000 of your $500,000 in 12 months.
As for the other $80K?
Legal Fees: $10K (or $800/month); Space: $30K (depending on where...around $2500/month); Accounting/Finance: $10K ($800/month); Server Costs + Hardware: $12k ($1k/month); Miscellaneous Expenses including random contractors here and there, marketing expenses, SWAG, a party if you want, some travel to a few conferences, food, etc.: $18k ($1500/month)
Hope this helps.