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The only time a founder should forego salary is before anyone else has invested a dime. And in that case, the paperwork should specify that you are earning a salary but it is deferred, ie you are lending that money back to the company.

Once a real investor enters the picture, if you can't pay yourself even a reduced salary (say 60% market rate), you're not raising enough money and/or you have a sucky investor. Add to the 60% salary with some of that back pay you are owed, or convert the back pay into equity at a favorable (to you) valuation.



I haven't seen anyone negotiate for unpaid back salary in a situation like that. Have you?


Typically, investors don't like it, and it tends not to be paid out in cash. However, I believe setting your books up that way gives you a better negotiating position when it comes to how low your salary will be, and possibly in relation to equity issues. It's a matter of having that sacrifice (no salary for X months) on paper so it can be respected as a real contribution with a concrete value, rather than just a giveaway that is somehow expected of a founder.




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