Founders who pay themselves excessive salaries (e.g., $300k each) after raising seed funding can burn millions of dollars on their own compensation, which is a major red flag that can lead to their removal from the company, because the true value of a startup lies in its equity, not in founder salaries.
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@SlashFinancial The Burn Rate Mistake That Can Strip Founders of Their CompanyAdded:
I think one of the biggest red flags in a startup founder is if they have a big cushy salary. I heard of one company specifically where like there were four founders and all of them were paying themselves 300k and they were they had raised only like 10 million. And so it was like a million dollars of burn just on founder salaries. And like a couple of them got fired. The value's in the equity.
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