VC’s vs Entrepreneurs, which cohort tend to earn more?

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JASON LEMKIN

It’s just what you’d think.

The “average” VC probably makes a $500k salary (some less, some far more).  At a tiny VC firm, the salary might be $50k (or even $0).  At a large firm, it might be effectively $1.5m-$2m.

But … the average VC fund doesn’t return all that much carry, or profit.

A top 25% VC fund will hit 2x net (i.e., double the capital it is given to invest, after paying back all those salaries and fees).  So that might make an average partner $10m over the course of a decade.  Which is more than a founder will probably make from a “pretty good” exit, although this can vary widely, depending on dilution, # of founders, etc. etc.

And very, very, very few VCs are billionaires.  Very few.  And only a relatively small handful are centimillionaires.

‘Cuz owning an effective 1% of Google is really, really great but not the same as owning 20%.
….

  • So a top founder takes much more risk, at least on paper, at least sort of.  But can make a lot more than even the best VC of all time.
  • A pretty good VC probably makes more than a pretty good and successful founder.
  • A mediocre VC makes a lot, lot, lot, lot more than a mediocre founder and if lucky and has good partners, can make more than a pretty good and successful founder.

….

So.  Don’t be jealous of VCs if you are a great founder-to-be 🙂

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Published on October 28, 2015
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