$400K Founders and the Startup Burn Dilemma

High pay, high stakes: what founder salaries reveal about startup risk.

There have recently been a lot of discussions in the games industry about the high salaries we’ve been seeing. People have struggled with the fact that someone might need to make $300,000 or $400,000 a year in a startup. Of course, salaries vary across different markets based on supply and demand for talent. Different societies have different costs of living; for example, the US is much more expensive than the Nordics, Turkey, or other parts of Europe (excluding London).

I’ve looked at thousands of pitch decks over the last six years as an investor in the games industry, and I’ve observed countless US investment rounds being raised with the knowledge that they’ll have a massive burn rate before shipping a game. Then the question becomes: is this something I want to participate in? Basically, I’m questioning whether it’s a better place to put venture dollars with a very expensive team and high valuation, because you can’t really dilute the founder’s ownership. Those two issues go hand in hand, and I wonder if it makes sense to place bets in these “expensive” startups.

From my experience as a founder and investor for the past 20 years, I know that Silicon Valley VCs traditionally didn’t invest in European companies because attending board meetings across the world was too burdensome. Zoom calls and the pandemic made it easier for investors to invest globally, since everyone was on video.

Still, US investors tend to prefer US companies over European or Asian ones due to geographic pattern recognition and familiarity with legal jurisdictions. Talking to founders during office hours doesn’t require super early or late calls around the globe. That said, they do invest in great European companies when they see them. It has happened countless times, especially in the later stages.

But they aren’t concerned about massive salaries or million-dollar monthly burns. US VCs don’t care if founders pay themselves $400K. They expect most of their portfolio to fail, so the only metric that matters is whether the winners can return the fund. In that lens, founder salaries are noise compared to market timing and product potential.

Here’s what one US VC who has invested in gaming told me, with permission to post:

We invest in outlier teams with the potential to build massive, enduring IP or platforms. A US team may be expensive, but if they can ship a genre-defining game, own a new niche, or build a billion-dollar community, they’re worth every dollar.

Many European founders take pride in running lean, while in the US, ambition is often equated with spending boldly. This isn’t just about money, it’s about narrative. A US founder asking for $400K may be framing themselves as a proven operator building a billion-dollar company, while a European founder would be seen as out of touch if they asked for the same.

There’s also a trade-off question that rarely gets asked: does paying yourself a high salary as a founder make you less hungry, or does it make you more resilient? I’ve seen both sides play out. On one hand, a founder who draws $350,000 a year might lose the urgency to prove their company’s worth before the cash runs out.

On the other hand, being financially secure can enable better decision-making. A founder who doesn’t need to worry about rent or school tuition might think longer term and avoid desperate pivots. In some cases, the high salary is what keeps a founder in the game when the grind gets tough.

The question is really about alignment. In a startup, every dollar you take out as salary is a dollar not spent on extending runway, hiring someone, or doing something that pushes the company forward. Founders should ask themselves: am I creating the best conditions for the company’s survival, or am I protecting my own comfort first? There’s no universal answer. Some founders can pay themselves well and still build enduring companies. Others discover too late that their own compensation shortened the very runway they needed to find product-market fit.