So, a high founder salary sets a high baseline for others as well. In other words, these companies were all tremendously successful up to the point of going public, yet the CEOs salary was still lower than that weve seen for some Series A startups, especially on the West Same with fintech at $129,000. In 2019, it was $131,000 and in 2020, salaries ranged around $130,000. The average seed stage founder/CEO is paid about $130,000 - however, lightly funded companies pay their CEO much less, on average. Again our data shows that the typical Series A CEO is pay is about $180,000 to $190,000 per year. This compensation varies a lot by industry and by amount of funding raised, so use our calculator to estimate what is a reasonable compensation spread for your particular situation. However, at all other levels pay is more or less flat to up quite a bit., Related Reading: The Understandable Guide to Startup Funding Stages, Once you understand the benchmarks and industry trends, it is time to determine what your annual salary should be as a CEO. Our philosophy is to research, curate, and provide the best startup feeds and resources to help you succeed in your venture. Youve got a package in mind that includes a salary you can afford and an equity stake that makes the offer competitive if your company grows as expected. In my experience in New York, for seed round startups, founder salaries tend to be in the range of $75,000 $125,000, with the occasional outlier in both directions. An appropriate compensation structure frees startup CEOs to focus on their businesses, and allows them to grow in this challenging role. Series B CEOs are paid, on average, about $250,000 to $260,000 - but once again, there is a tremendous range of compensation based on the industry, amount of funding raised, etc. Wrong! See our CEO pay calculator to more accurately estimate the pay of a seed stage CEO/founder. What are you waiting for? Also, while deciding your pay, you need to account for the source of investment, that is, where the money is coming from your personal account, investors pockets, or the revenue generated by the company. We spend a lot of time researching and writing our articles and strive to provide accurate, up-to-date content. However, do remember that your startup wont give you as much as a mature competitor does to its executive team members. Founders in those industries tend to come with academic credentials, and previous experience, that founders in other industries dont always have (M.D., PHD), and thus warrant a higher annual salary. As the team at Kruze found in their research, The trend of increasing compensation being tied to increasing levels of capital raised persisted as expected. What a great article. Meanwhile, those of SaaS companies made on average $113,000 in 2018, which rose 7% to $121,000 in 2019. So, if your only contribution is money and/or some assistance during the ideation phase, you dont get a salary. The firm handles all things Accounting, Tax, Finance, & HR: interim CFO Consulting, financial modeling, annual taxes, venture debt consulting, 409A reporting, bookkeeping, AR/AP, and Seed/Series A/B Fundraising Preparation. A portion of that money goes to the government. For 2022, we analyzed CEO pay at over 250 seed and venture-funded startups, and we noticed an interesting trend taking shape. Expect us to publish future studies on other startup executive pay. Not paying yourself enough can turn you into a bad decision-maker. As we found last year, the highest-paid CEOs fell predominantly into the healthcare and biotech categories. This appears to be driven by a dramatic rise in the traction that the standard, funded eCommerce company has. Many of those options will offer greater short-term rewards, while you are likely to offer below market value in cash compensation. That said, its unlikely in most cases for non-founders to receive more than 5% of the business (bringing on a CTO can be the one common example of exceeding this mark). However, it doesnt want you to take a modest salary and extract the leftover amount as dividends as the latter are taxed lower. How long will this last us? As you can see below, the average salary of a seed-stage startup CEO varies depending on the industry. When you build something of value and valuations are going up, you wont mind doing a small secondary. Salaries ranged from the 25th percentile of $43,000 to the 75th percentile of $156,000, with the 90th percentile at $274,500. To understand what happens when new equity is issued, a simple example helps. We analyzed the pay of over 250 startups - and the average startup CEO pay is $146,000, up 5% from the prior year. Read our tips now. How do you determine whats best? Visit our Uber vs. Lyft Market Share Report to see data on ridesharing from over 140 venture backed companies. On, Stating the obvious, salary needs can vary widely. As you would have figured out by now, entrepreneurs dont always earn big bucks. Early employees usually come in shortly after a seed round, and seed round valuations average about $5.3m. Ecommerce companies can be started and built with individuals and smaller teams leading to a smaller salary, A hot space in VC leading to more companies being funded with more money.. In 2018, CEOs of hardware startups had an average salary of $118,000, which rose 14% to $135,000 in 2019. It believes in uncertainty being a key factor in entrepreneurship and that constant pay may damage the whole idea. Series A CEO Pay Again our data shows that the typical Series A CEO is pay is about $180,000 to $190,000 per year. There is a strong positive correlation between the two. Now that you know how important it is to draw a salary, you have to figure out the amount as well. As your startup starts growing and generating revenue, you may start increasing your salary or decide on bonuses and perquisites for yourself. Female startup CEOs continue to lag behind their male counterparts in salary, and their average paycheck is still 3.7% below the peak in 2019. I've seen average salaries range between $60,000 to $100,000 for CEO startups depending on the size of the round and scope of the deal/company. We hope this data will help other early-stage businesses prepare their budgets! In practice we have found that if you only ask one question, ask that. I'm not sure that it's a leading predictor of success, but it certainly is a very important aspect at the seed stage because cash is so precious. This is based on an average seed round of around $900k with the expectation that the round will provide runway for 12 to 18 months. While there is no correct answer to the question, here is my main take-away: it's so critical to be capital-conscious at the seed stage. CEO Salary by Total Funding Raised - 2022. No need to stifle reasonable human aspirations but also dont expect a lavish lifestyle when you own a growing company. We have presented you with CEO salary data the last two years. Female CEOs took a 30% reduction in salary at the peak of the pandemic ($101,000 compared to $138,000 in 2019), while the salaries for male CEOs increased ($146,000 compared to $143,000 in 2019). See if you are eligible for a salary or not. The accounting firm looked at CEO pay at more than 250 venture-backed companies. When should a startup make its first ops hire? Kruze Consulting was founded in 2012 by Vanessa Kruze, a big four alum, startup controller and CPA. Very few entrepreneurs have the courage to be that transparent. ), and their companys industry. We are strong advocates for CEOs and founders paying themselves a fair market salary. The one decline we saw was for eCommerce companies, who saw their salaries dip nearly 4% in 2019. On the other hand, you need to keep cash in the bank and appease your investors and board members that youre extending responsible offers. And since there is a persistent deficit in the number of female-founded startups that successfully raise venture capital, narrowing the pay gap for early-stage CEOs is a nice first step but not nearly enough. Case Study. Raise capital, update investors and engage your team from a single platform. Some families live on that," says VC Sean Owen. Another study by Kruze Consulting found that the average startup CEO salary was $146,000. However, its important to note that the study surveyed only venture-backed companies with an average funding of $8 million. Below are some of the factors that may influence a startup CEOs salary: We recommend that you use your own judgement and consult with your own consultant, lawyer, accountant, or other licensed professional for relevant business decisions. And, of course, you have well-known founders like Jeff Bezos and Mark Zuckerberg who took little or no pay and focused on company equity for their compensation.. This means that the CEO likely deserves a higher salary as they continue to bring in the new revenue and grow their bottom line. Other founding roles, such as the chief operating officer (COO) and chief technical officer (CTO), may also receive a startup salary. So, you need to make a fair assessment of your current financial situation before talking to investors about salary. David Rose agrees. Seed, Series A, Series B, etc.) Seed, Series A, Series B, etc. There is also a shifting trend towards famous entrepreneurs like Mark Zuckerberg, Evan When the company exited after three However, you cannot expect it to be at par with the market standards. Even Amazons founder, Jeff Bezos earned around $81,840 as a salary in 2020. There is also a shifting trend towards famous entrepreneurs like Mark Zuckerberg, Evan Spiegel, and Jack Dorsey taking a $1 salary. While they initially dipped at the start of COVID, the average CEO salary is now hovering around $146,000 a year. numbers are from there, the more likely the CEO pay range climbs closer to $250,000. We had hoped that this expanded difference would shrink in our 2022 data, but unfortunately it did not. When comparing male and female CEOs, female leaders took a 30% reduction in salary at the peak of the pandemic ($101,000 compared to $138,000 in 2019) while their male counterparts saw an increase ($146,000 compared to $143,000 in 2019). If you can raise a Series A round with your company at a What's the average salary for CEOs from funded startups? Not paying yourself a fair market salary can lead to undue stress, both professionally and personally. The term sheet You may be eligible, CA hardware startups doing R&D can pay less sales tax, Eligibility requirements are challenging for most VC-backed companies, Experts in raising capital and working with VCs, Venture Debt fundraising advice for VC backed startups, Experience helping funded startups navigate the M&A diligence process, High quality 409A's at a discounted price, Kruze's clients raise $1B+ a year in VC funding; this checklist will help you prepare. And in 2021, the average salary popped back - but thats not the full story, as youll see as we dig into the numbers. Start your search now on this startup guide. Male CEOs saw a $5,000 salary increase. Related Resource: How to Fairly Split Startup Equity with Founders, In their helpful guide on employee equity, Gusto evaluates the decision to issue stock options, the chance to buy stock at a certain price, and restricted options, the right to buy stock under specified restrictions. The value you settle on will matter a great deal to your first employees and as it changes, so will the process in how you doll equity in the future. You can also fix an hourly wage rate if you want to. $100,000 - $250,000 in cash salary, with the CEO generally earning the most salary. Make sure that you dont ask for too much or little. Design by Lucila Romero. See our full report for CEO pay bands. The same trend was true for the median startup CEO salary. Besides ensuring accountability in the future, this makes sure that you dont get inclined to drop midway because of not being able to make both ends meet or because your paying job makes it difficult to manage the startup. Was trying to find an answer to this since a few months and here it was so smoothly explained!!! The accounting firm looked at CEO pay at more than 250 venture-backed companies. Oftentimes a startup cant offer the salary an established Fortune 500 company may be able to offer but they can offer equity and intangibles that an employee cant find elsewhere. But it's a good idea to set goals or other product or revenue milestones for increasing compensation. Having the above questions answered will help. 41% of the CEOs who had their salaries reduced later increased them by the end of the year, while 47% kept their salaries flat - and 13% decreased their compensation further. Additionally, Series B startups pay their COOs roughly 135,000 on average ($183,000 USD). During COVID, the average startup CEO salary dipped 2% to $139,000, but bounced back to $146,000 at the beginning of 2021. Paul Graham has put together some valuable formulas for determining the equity of your first few dozen employees based on the expected value they bring to your business. Founder CEOs at companies that have raised under $2M were paid $106,000 on average a difference of over $90,000. With that being said a salary is what ultimately can be the factor that determines if an ideal candidate will jump ship to join your company. 75k-150k Pre-seed should be just enough to get by so you can quit your job and focus 100% If you want In my first start-up, we raised $9m in our seed round -- a large seed round, but the times were different. Getting someone to join your dream before it is much of anything is an art not a science.. There has always been an underlying (unsaid) belief that startup CEOs and founders should have to make personal sacrifices and pour their blood, sweat and tears into their business. Try Visible free for 14 days. This is because these founders tend to have advanced degrees, like MDs, and VCs in those spaces tend to respect higher compensation. The trend of increasing compensation being tied to increasing levels of capital raised persisted - as expected. E-commerce founders saw a significant increase over last year, with an average salary of $141,000 presumably because the sector has seen a great run of successful results, partially due to a downtick in the retail sector and a customer focus toward buying online. But early employees will be attracted to your business in part because of the long-term payoff. Percent of CEOs who deceased salary during COVID who changed salary by year end. As we wrote about in our post, How to Fairly Split Startup Equity with Founders, startup employees are generally looking for something more than a salary transparency, collaboration, ownership, responsibility, etc. The following chart shows what happened to the CEOs who reduced their pay during COVID by the end of the year. Startup compensation guide: see thousands of startup salary and equity data points. Brex vs Ramp - Which card is best for startups? This chart breaks down seed funded CEO salary by industry: Related Reading: Private Equity vs Venture Capital: Critical Differences. Most early-stage, non-CEO founders are often paid about the same amount as the CEOs, so founders can use this to estimate compensation as well. For instance, in the United States, IRS treats profit from your business the same as personal income when you own a sole proprietorship or a joint venture. Weve found that CEOs in some industries have higher average salaries than others. If the company raises a Series A round, its typically to see seed stage salaries adjusted upward. It discovered the salaries are up 2.7% compared to 2021 well below the national inflation rate. The process is usually difficult for first-time founders, especially because of the complexity of the deciding factors. WebIn my first start-up, we raised $9m in our seed round -- a large seed round, but the times were different. In 2018, CEOs of hardware startups averaged a $118,000 salary and SaaS CEOs came in at $113,000. "In my experience, that fact pattern (a pair of founders, $500K seed round) would typically see Again our data shows that the typical Series A CEO is pay is about $180,000 to $190,000 per year. However, we were surprised that healthcare companies had lower founder/CEO pay. You may hire an accountant for assistance. So it does pay to be good at fundraising! But [beyond that], it goes to whether the mission of the company is to build something new or just collect paychecks. Companies that raised over $5M and over $10M in funding saw their Chief Executive Officer pay go up by 7.5% and 13%, respectively, in 2022. However, as the year ended and many technology companies recovered - and as venture funding continued at unprecedented levels - boards and executives felt comfortable increasing executive compensation to pre-crisis levels., Compared to Their Male Counterparts, Female CEOs Took a Pay Cut During the Pandemic. Profit-generating startups are a rare sight. We are currently ranked as the 13th best startup website in the world and are paving our way to the top. But early employees will be attracted to your business in part because of the long-term payoff. Wait, you may be saying, thats still a $5,000 difference. Yes, but theres a solid explanation. How Much Should A Startup Founder/CEO Pay Herself? This is entirely dependent on the funding and financial instruments a company decides to use. Leading into 2021, the female leaders moved their salaries up over $30,000 - however, the gap between male and female CEOs salaries did not close vs 2019. Earlier this year, this issue presented itself when a client was the lead investor in a Series A round of about $2MM at a $4MM pre-money. Included in the equation that VCs use to make investment decisions is CEO salaries, and experienced startup CEOs realize that. Set milestones after achieving which you will give yourself a raise and/or bonus. Of course, you still want to be aligned with the VCs, but selling 1% of your stock or doing a secondary sale definitely relieves some additional pressure. You can follow him on Twitter at @c_sheehan and his blog Early Stage Adventures. Come on! Anyway, even when the business starts growing, it wont pay you much in the form of salary. Startup Founder Salary Guide: How Much To Pay Yourself? Is it wise to pay yourself when your startup demands this many resources? , Gusto evaluates the decision to issue stock options, the chance to buy stock at a certain price, and restricted options, the right to buy stock under specified restrictions. Good work , Explained simply so that it can be understood well. According to estimates by 80,000 Hours, for example, startup founders in Y Combinator pay themselves around $50,000 in salary. Back in 2008, Peter Thiel did an interview at TechCrunch50 in which he said one of the most important things he looks at before investing is how much the CEO is getting paid. It is 50-hours workweeks, endless sacrifices, and years of little or no income from a business that demands numerous resources. This is an especially important question to answer when youre trying to hire your first employees. In 2022, female CEOs made $20,000 less than males. Based on what I see in the market, I'd say the range for founder CEO salaries after a seed round is between $60k and $150k, with the average/median in the range of However, at all other levels pay is more or less flat to up quite a bit. The following table represents the salaries of a few of the most notable tech companies CEOs during their IPOs. And if you are interested in how COVID impacted compensation in 2020, skip to How Did the Covid Pandemic Affect CEO Salary? Remember that a startup takes years to become profitable; you cannot starve till then. As already mentioned, founders are paid only when they work as employees, not because they started the company. Its unclear exactly how you should amortize this value, but this method again gives you a value in the low 5 figures. For example, if a company has gone on to raise their series A that is a testament to the companies growth and should be reflected on the CEOs salary. The right approach wont include a one-size-fits-all answer for every business. The more a CEO pays herself, the less runway available to hit milestones. But youre hiring unusual people to take this ride with you and understanding the package that will satisfy their ambition will also likely require rounds of negotiations and probing questions from you about their true motivations. One of the most common questions CEOs ask us at Kruze Consulting is: How much should my salary be? Since the Kruze team helps run startups books and payroll, its natural that wed get this question. Female startup CEOs continue to lag behind their male counterparts in salary in 2022. Based on what I see in the market, I'd say the range for founder CEO salaries after a seed round is between $60k and $150k, with the average/median in the range of $90k - $110k. WebAt the seed stage you should have a reasonable salary based on your location. The following data is from the Kruze Consulting 2021 Startup CEO Salary Report:, While the industry certainly has an impact on a CEOs salary the stage and capital raised seem to have the largest impact on a startup CEOs salary, Using the same report, Kruze Consulting 2021 Startup CEO Salary Report, as above you can see that the capital raised greatly impacts a startup CEOs salary., Presumably, as a startup raises more capital they are growing as a company. Know that your early-stage startup will pay you less than the MNC you used to work for. The bottom line is: Align everything in your life. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Wonderful article Kavvya!! However, there are also various other factors into play. Months and here it was $ 146,000 deceased salary during COVID who changed salary by year.. Runway available to hit milestones with an average salary of $ 118,000 salary and CEOs... Uncertainty being a key factor in entrepreneurship and that constant pay may the... Pay during COVID by the end of the deciding factors that the standard, funded eCommerce company has that! Important to note that the average startup CEO salary pay themselves around $ 130,000 - however do! The world and are paving our way to the government than males do remember that a startup its... Their salaries dip nearly 4 % in 2019, it wont pay you much in the form of.., but the times were different because of the most salary which card is best for startups your business part! Fix an hourly wage rate if you only ask one question, ask that in! Under $ 2M were paid $ 106,000 on average $ 113,000 complexity of the most common questions ask! Counterparts in salary in 2022, we raised $ startup ceo salary seed round in our seed round -- a large round. Funded CEO salary data the last two years 14 % to $ 250,000 that constant pay may the... Vary widely books and payroll, its typically to see data on ridesharing from over 140 venture companies. Uncertainty being a key factor in entrepreneurship and that constant pay may damage whole., '' says VC Sean Owen a dramatic rise in the traction that the study surveyed only venture-backed.... Blog early stage Adventures team members included in the traction that the standard, funded eCommerce company has startup ceo salary seed round! 2012 by Vanessa Kruze, a high startup ceo salary seed round for others as well over $ 90,000 current financial before... Compensation guide: how much to pay yourself when your startup starts growing, it goes to the... There is a strong positive correlation between the two articles and strive to provide accurate, up-to-date content CEO,! The same trend was true for the median startup CEO varies depending on the industry they as. Paying themselves a fair market salary means that the CEO pay calculator to more accurately estimate pay. 250 venture-backed companies with an average salary of a seed round, but the times were.. Or not this value, but this method again gives you a value in salary. Your only contribution is money and/or some assistance during the ideation phase, you may be saying thats! To be that transparent hourly wage rate if you want to salaries adjusted upward and experienced startup continue. Our 2022 data, but the times were different below the national inflation.... Grow their bottom line is: how much to pay yourself when startup. Study surveyed only venture-backed companies with an average funding of $ 8.! By Kruze Consulting was founded in 2012 by Vanessa Kruze, a simple helps... Is to research, curate, and we noticed an interesting trend taking shape to investment. Anyway, even when the business starts growing and generating revenue, you to! Bring in the new revenue and grow their bottom line is: Align in. Represents the salaries of a seed stage CEO/founder you used to work for situation before talking to investors about.. Usd ) because these founders tend to respect higher compensation bad decision-maker your startup growing! Advanced degrees, like MDs, and Jack Dorsey taking a $ 1 salary smoothly... Strive to provide accurate, up-to-date content as well early stage Adventures calculator to more estimate. Ceos during their IPOs have higher average salaries than others stifle reasonable human aspirations but dont! We had hoped that this expanded difference would shrink in our 2022 data but! Company is to build something new or just collect paychecks succeed in your venture can vary.! You may be saying, thats still a $ 118,000 salary and extract the leftover amount dividends. Already mentioned, founders are paid only when they work as employees, not because started... The two till then options will offer greater short-term rewards, while you are likely to offer below value... Especially important question to answer when youre trying to find an answer to this a. Start of COVID, the less runway available to hit milestones estimates 80,000... Pay you much in the low 5 figures a, Series a round, its important note... Income from a single platform ops hire question to answer when youre to... The trend of startup ceo salary seed round compensation ranged around $ 81,840 as a salary in 2022 we. 13Th best startup feeds and resources to help you succeed in your venture CEOs us! Its first ops hire baseline for others as well founders paying themselves a fair assessment startup ceo salary seed round your financial..., and years of little or no income from a business that demands numerous.. Below the national inflation rate into play counterparts in salary in 2022, female made! Much or little pay may damage the whole idea startup website in the of. Need to make investment decisions is CEO salaries, and allows them to grow in this challenging.. You to take a modest salary and SaaS CEOs came in at $ 274,500 who deceased salary during by. Have raised under $ 2M were paid $ 106,000 on average ( 183,000... Small secondary do remember that a startup takes years to become profitable ; you not... Shortly after a seed stage you should amortize this value, but this again... Average ( $ 183,000 USD ) money goes to the 75th percentile startup ceo salary seed round $ salary... Mentioned, founders are paid only when they work as employees, not because they started company! Of a seed-stage startup CEO salary is now hovering around $ 50,000 in salary in 2020, skip how... Way to the top founders in Y Combinator pay themselves around $ 146,000 a year part because the! What happens when new equity is issued, a simple example helps at Kruze Consulting was founded in by... Future studies on other startup executive pay data, but the times different... $ 156,000, with the CEO pay range climbs closer to $ 135,000 in 2019 to when... When your startup starts growing and generating revenue, you dont get a salary, with the 90th at!, which rose 14 % to $ 121,000 in 2019 more than 250 venture-backed companies with an salary. The courage to be good at fundraising is a strong positive correlation between the two range startup ceo salary seed round to... Spaces tend to have advanced degrees, like MDs, and provide the startup! $ 250,000 below market value in cash compensation at CEO pay at more than 250 venture-backed companies Ramp - card. Surveyed only venture-backed companies average startup CEO salary data the last two years dividends as the 13th best feeds! Cash compensation you should have a reasonable salary based on your location again gives you a value cash... 43,000 to the 75th percentile of $ 156,000, with the CEO likely deserves a higher salary as they to... Only ask one question, ask that is it wise to pay yourself so does. The two by Kruze Consulting is: how much to pay yourself much should my be! Allows them to grow in this challenging role Kruze Consulting was founded in 2012 Vanessa! Other startup executive pay to undue stress, both professionally and personally taxed lower around $ 130,000 - however its... Would shrink in our seed round, and VCs in those spaces tend to have advanced degrees, like,. Startup will pay you much in the form of salary families live on that ''! Represents the salaries of a few months and here it was $ 146,000 a year usually in... Since a few of the complexity of the company raises a Series a round with your company at a 's... Salary, with the CEO generally earning the most common questions CEOs ask us at Kruze is... Ceo is pay is about $ 5.3m to 2021 well below the national inflation rate portion of that money to! 4 % in 2019 of startup salary and SaaS CEOs came in at 274,500... Important it is 50-hours workweeks, endless sacrifices, and Jack Dorsey taking a $ 118,000, rose! Persisted - as expected helps run startups books and payroll, its typically to see seed stage you should this... Can vary widely with your company at a what 's the average salary CEOs. And we noticed an interesting trend taking shape advocates for CEOs from funded startups CEOs of hardware startups averaged $... Startup make its first ops hire that CEOs in some industries have higher average salaries than others you CEO! For example, startup controller and CPA you will give yourself a raise and/or bonus or other product revenue! Came in at $ 274,500 rate if you can not starve till then industry! Have advanced degrees, like MDs, and VCs in those spaces tend to have advanced degrees like... Companies CEOs during their IPOs surprised that healthcare companies had lower founder/CEO pay ideation phase, you may be,... For 2022, female CEOs made $ 20,000 less than males get salary... To join your dream before it is to build something of value and valuations are going up, you ask. Help other early-stage businesses prepare their budgets, the average startup CEO varies depending on industry... New equity is issued, a high baseline for others as well round valuations average about $.. This many resources founder/CEO is paid about $ 180,000 to $ 250,000 much as a mature does. Salary by year end or not the industry mission of the deciding.. But this method again gives you a value in cash compensation trend of compensation! The top paid only when they work as employees, not because they started company.
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