Tip #95: Massive pay cut

Tip 95: I took a pay cut. Every few pitches we hear the entrepreneur tell us that:

 
 

I’m not sure what message people think this conveys to potential funders, but note some potential implications from a pitcher saying this.

·        Audience: You used to earn a lot of money. Then why haven’t you funded this entirely on your own and why are raising money from us? Something doesn’t add up here.

·        Audience: You think working on a startup – doing something you love to build a business from which you could make a lot of money – is such a sacrifice? Being an entrepreneur means taking risks. Perhaps you’re not cut out to be an entrepreneur, or perhaps you’re not doing this from a love of your business?

·        Audience: So you have lots of resources to fall back on. Are you really going to be doing everything you can to make this business successful if you can simply go back out and resume your six-figure middle management role?

·        Audience: So you used to earn six figures. That probably means you have the mortgage, spending requirements, and discretionary spending habits that go with that. What happens now you’re earning nothing in a startup? How long before you are double dipping a six-figure salary and equity upside based on our investment? 

I suspect you need to think harder about the negative implications you’re conveying when you tell us how much you “gave up” to become an entrepreneur.