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One part that surprised me: "You have not taken a salary in two years. Typically, founders doing that have kept records and get paid in shares." I sorta figure
by brett 20y ago
One part that surprised me:
"You have not taken a salary in two years. Typically, founders doing that have kept records and get paid in shares."
I sorta figured working for free (or close to) for a while was just part of the deal if you want to keep burn rate down (or simply don't have cash). Interesting to note that you can get paid for it later. How common is this?
- joshwa 20y agoI've seen this before in business plans and such... the being paid in preferred shares part is new to me; I've seen it as deferred compensation accumulating as a liability for the company to be paid in cash at some later date. I suppose being paid in preferred shares makes sense if you are expecting acquisition or a later VC rounds, whereas deferred cash comp. makes sense in a cash-only organic growth situation, and gets factored into your break-even calcs.
- RyanGWU82 20y agoI haven't done any VC deals myself, but I hadn't heard of this before either. I suspect the offer of preferred stock was a sweetener that the investor made for this particular founder -- a show of good faith.