Ice VC founding partner Mrunal Jhaveri has called for strict salary caps for startup founders after a founder used Rs 5 crore in seed capital for personal expenses. Jhaveri argues that early-stage compensation should be modest, with long-term wealth creation tied to equity growth rather than upfront high pay.
Mrunal Jhaveri, a founding partner at Ice VC, recently brought attention to the governance of startup capital after a disagreement with a founder who used Rs 5 crore from a seed funding round to purchase a new car and an apartment. This incident has sparked a wider conversation about how investor funds are managed and whether early-stage founders should treat venture capital as personal income.
Proposed Compensation Tiers
To prevent the misuse of capital, Jhaveri outlined a structure that ties founder pay to the startup’s funding stage. For companies in the seed stage—typically those raising between Rs 4 crore and Rs 12 crore—he suggests a monthly salary range of Rs 60,000 to Rs 1.2 lakh. The core argument is that in these initial phases, where business models are often unproven and cash burn is high, the focus must remain on business development rather than personal lifestyle upgrades.
As the company matures, Jhaveri suggests that compensation can scale upward. For startups that have reached Series A funding, generally involving rounds between Rs 20 crore and Rs 35 crore, he proposes a monthly salary of Rs 3 lakh to Rs 5 lakh. By the time a company secures Series B funding, which often ranges from Rs 50 crore to Rs 100 crore, base salaries could reach Rs 5 lakh to Rs 7 lakh, with the potential for performance-based bonuses to bring total annual compensation above Rs 1 crore.
The Role of Equity in Founder Wealth
Jhaveri emphasized that the primary financial reward for a startup founder should come from equity appreciation, not from a high salary. For companies at the Series C stage and beyond, where success becomes more quantifiable, he noted that founders can earn Rs 3 crore to Rs 4 crore annually and may consider selling a portion of their equity to 'take money off the table.'
This perspective reflects a common venture capital expectation: that founders are incentivized to build long-term value. According to Jhaveri, if a founder's immediate priority is a high fixed salary rather than building business value, they might be better suited for corporate roles where fixed compensation is the norm. For investors and stakeholders, this debate underscores the importance of clear governance and financial monitoring in the early stages of a startup's life cycle to ensure capital is effectively used to scale the business and protect investor value.