Let’s say you’re a founder CEO. You took the risk. You raised the money. You hired the team. You lived the volatility—every 2 a.m. existential spiral, every almost-fired executive, every late-stage Hail Mary. You are the reason the company exists.
Now it’s year four. You’re scaling. You’ve got product-market fit. You’ve got revenue. And you’re thinking, “Hey, maybe I should refresh my equity or get a comp package that reflects this next phase.”
And that’s when it hits you: the market doesn’t actually value your ongoing role.
The Founder-CEO Discount
Here’s the dirty little secret of startup finance: once you're past your original vest, your go-forward comp is usually a fraction—often 1/4 or less—of what a new, outside CEO would get walking in the door.
Let’s break that down.
If an outside CEO is hired at Series C or D, they’ll typically receive:
- 4–6% equity (new grant, fully unvested)
- Meaningful cash comp (often 600K base, plus bonus)
- Board protections and golden parachutes
By contrast, here’s what a founder CEO gets:
- The leftover vest from their original 4-year grant (which has mostly vested)
- Maybe a small top-up—1% or less if you’re lucky
- No bonus structure, no guaranteed cash incentive
- And a narrative from the board that sounds like: “You’re already well-compensated.”
But here’s the kicker: that “well-compensated” equity? It was all earned in years 0–4. It’s not compensating you for the next four.
Why This Happens (And Why It’s Bullsh*t)
VCs aren’t evil. But the system they’ve built subtly (and sometimes overtly) devalues the continued contribution of founder CEOs.
Let’s dig into why.
1. "Equity Is for Risk"
This is the most common rationale: you got big early equity because you took early risk. Now that the company is safer, you don’t get more.
The problem? The risk doesn’t go away. It just changes form.
- Instead of technical risk, you face execution risk.
- Instead of fundraising risk, you manage scale risk.
- Instead of dying tomorrow, you face death by a thousand cuts.
The skills are different. The stakes are higher. And the time horizon is longer. But the compensation logic doesn’t update.
2. The Narrative of Ownership
Founders are often told they "already own a big chunk." But let’s talk dilution.
If you started with 20%, raised multiple rounds, and issued multiple employee pools, you might be down to 5–7% by Series C. And that’s before secondary markets, M&A, or public overhang.
Meanwhile, a new CEO walks in with a fresh 4% unvested grant and no past dilution baggage.
It’s not just unfair—it’s structurally punitive.
3. Misaligned Incentives at the Board Level
Once a company has a real board, you’ve got folks around the table who:
- Represent funds that care about aggregate returns, not individual founder longevity
- Think in terms of “replacing management” as a lever (which it sometimes is!)
- View founder liquidity as a distraction or risk
So when a founder asks for a comp refresh, it triggers a subconscious response: “Are they still hungry?”
No one questions if an outside CEO is “hungry” when they’re offered 5% equity.
But when it’s the founder? Somehow it’s seen as greed.
The Case for Founder Equity Refreshes
Let’s be pragmatic. The answer isn’t to cry injustice—it’s to make the economic case.
1. Retention Is Expensive
Replacing a founder CEO is disruptive. Recruiting a great external CEO can take 6–12 months and easily cost 7 figures in search fees, comp, and transition costs.
If a comp refresh keeps the founder CEO engaged and scaling the company another 2–4 years? That’s a bargain.
2. Momentum Has Value
Founders move fast. They’ve seen every version of the company. They have intuition you can’t teach and context you can’t replicate.
Boards often underestimate this. But investors love momentum—and founders are the momentum engine.
3. Re-leveling Signals Maturity
In a weird twist, equity refreshes can signal to the market that you’re building a serious company.
It says:
“We have a professional board. We compensate executives based on forward value creation. We treat founder roles like we treat any other senior operator.”
That’s a mark of discipline—not indulgence.
What Good Looks Like
Here’s what I’ve seen in healthy cap tables:
- Structured refreshes: At year 4, the board and founder pre-plan a new equity package (2–3% over 4 years is common).
- Double-trigger vesting: Aligning equity with continued leadership and company outcomes.
- Performance equity: Grants tied to growth, margin, or valuation milestones.
- Founder-friendly secondaries: Allowing founders to take chips off the table while continuing to drive upside.
If You’re a Founder, Read This Twice
This isn’t about greed. It’s about alignment.
If you’re the CEO in year 5, managing a 200-person team, hitting revenue targets, and fundraising like it’s your full-time job—you should be compensated for that future value, not just the equity you earned when you were sleeping on a mattress in the office.
Don’t let legacy equity blind you to your market value.
And if your board doesn’t see that?
Maybe it’s time for them to refresh.