A guide to pay increase after company raises a new funding round
So your company finally closed its round, your team is celebrating and you can’t help but ask yourself, “Does this mean I’m getting a raise?!” The next question you ask is…”Should I even ask for a raise and what is possible?”
This guide will help you navigate the process in determining the best time and how you could ask for a raise after your company accomplished closing its venture round.
First, congratulations on the round, that’s a huge company achievement. Secondly, congratulations for asking yourself the question about whether your compensation should change. It is a really uncomfortable topic especially after such a happy milestone for the company.
- Is this the right time to negotiate?
A company going through a funding round is a big ordeal and I’m sure you, your teammates, and management is breathing a sigh of relief to be finished with the process. Now that a company is flushed with cash, they will use that money to expand their business objectives. This usually, but not necessarily, involves hiring. While you might assume that also might mean raising your salary, that may or may not be the case.
- Who do you ask?
The company’s accomplishment of closing a round is a time of celebration, and spirits are high, but make sure to be wary of asking for personal favors. This is why it would be best to invoke “collaborative negotiation”. Instead of going directly to your higher up and asking for more, it’s best to come from a team stance, having the collective at heart.
- How do you ask?
After a funding round would be a good time to invoke “collaborative negotiation” also called interest-based negotiation in which the relationship is something important and worth maintaining or even improving. In the book Getting to Yes: How To Negotiate Agreement Without Giving In by Roger Fisher, he discusses how in collaborative negotiation, it is assumed that the pie can be enlarged by contributing value to both parties, thus creating a win-win situation.
- How much to ask for?
Okay, so now that you’ve come up with an essential game plan of in what manner to ask for a raise after your company has obtained investment, the next question you may be asking is, “How much do I ask for?” This is where Riva comes in, we can help you evaluate your worth by cross checking 1+m data points along with your experience and background. If you’re looking to ask for a raise and need some extra help, reach out to us!
For further value, we’ve also attached some examples when asking for a raise after a funding round:
Asking for a raise
“Hi [manager name], this is really exciting! I’m really glad the company was able to do so well and close the round so quickly. When I originally joined the company I accepted an under market rate salary because I was so excited about where the company was going and because the company would need to manage cash carefully to achieve its funding. Now that we’ve achieved some pretty significant milestones, I’d love to talk to you about hopefully getting more compensation closer to a fair market rate.”
“I’ve done some research and the range for someone like me in a job similar to this one appears to be X to Y plus (bonus, options, etc.).” Can we talk about a transition path to market compensation?
Note: If the company says that they still need you to take below-market compensation, then depending upon your position, you might be able to say that in effect you are helping to finance the company’s growth and would like to get some equity or increase your equity.
Other forms of collaborative solutions
When accepting a job offer that is below market at a small company:
“Hi [manager or recruiter name], sounds good. I took a look at the compensation offered. While this is a bit below market, I’m willing to accept this because I’m excited about where the company is going and I know we can get me to a fair market rate once the company hits certain business or funding milestones. Perhaps we can discuss a bump in compensation when the company raises its next round?”