He has Rs 5 crore in the bank. Yet, he pays himself Rs 50,000 per month. Taking to LinkedIn, Aditya Arora, a seasoned investor explained why this seemingly frugal move was ultimately foolish in hindsight.
His post talked about a Bengaluru-based founder who paid himself Rs 50,000 per month. This was actually below entry-level engineer pay in Bengaluru.
Arora then explained why founders underpaying themselves affects their reputation as well as personal lives.
According to him, the first and most immediate impact is the mental pressure it creates in the founder’s personal life. Financial worries at home begin consuming a significant portion of their attention and energy, ultimately affecting their ability to focus fully on building the business. Important professional responsibilities can start taking a backseat because personal financial problems demand constant attention.
He further pointed out that prolonged financial strain can also create tension within families, especially between founders and their spouses. In the early stages, loved ones may remain supportive and patient, believing future success will compensate for present sacrifices. However, as months pass and financial uncertainty continues, frustration gradually replaces optimism, turning money-related stress into a recurring issue in personal relationships.
“Second, his spouse stops believing in the company. The "I will pay you back when we exit" line works for 6 months. By month 18 it is the only conversation at home. ..” he explained.
Arora also argued that investors do not always interpret extremely low founder compensation as a sign of discipline or humility. Instead, it may raise concerns about instability and sustainability.
He then argued that founders should pay themselves Rs 24 lakhs per year.
“That is 5 percent of your Rs 5 crore bank balance. Enough to live without distraction. Not enough to feel rich. The founders who closed Series A on the strongest terms paid themselves between Rs 18 lakh and Rs 30 lakh.
Almost none under Rs 12 lakh…” he wrote.
Arora is the CEO of Faad Capital. He has invested in more than 130 startups. He is based in Delhi.
His post talked about a Bengaluru-based founder who paid himself Rs 50,000 per month. This was actually below entry-level engineer pay in Bengaluru.
Arora then explained why founders underpaying themselves affects their reputation as well as personal lives.
According to him, the first and most immediate impact is the mental pressure it creates in the founder’s personal life. Financial worries at home begin consuming a significant portion of their attention and energy, ultimately affecting their ability to focus fully on building the business. Important professional responsibilities can start taking a backseat because personal financial problems demand constant attention.
He further pointed out that prolonged financial strain can also create tension within families, especially between founders and their spouses. In the early stages, loved ones may remain supportive and patient, believing future success will compensate for present sacrifices. However, as months pass and financial uncertainty continues, frustration gradually replaces optimism, turning money-related stress into a recurring issue in personal relationships.
“Second, his spouse stops believing in the company. The "I will pay you back when we exit" line works for 6 months. By month 18 it is the only conversation at home. ..” he explained.
Arora also argued that investors do not always interpret extremely low founder compensation as a sign of discipline or humility. Instead, it may raise concerns about instability and sustainability.
He then argued that founders should pay themselves Rs 24 lakhs per year.
“That is 5 percent of your Rs 5 crore bank balance. Enough to live without distraction. Not enough to feel rich. The founders who closed Series A on the strongest terms paid themselves between Rs 18 lakh and Rs 30 lakh.
Almost none under Rs 12 lakh…” he wrote.
Arora is the CEO of Faad Capital. He has invested in more than 130 startups. He is based in Delhi.
