According to ZipRecruiter, for example, the average salary for the position of startup CEO is just over $110,000 per year. Roughly, for every additional $1,000,000 raised, a startup CEO will take home between $4,000 and $5,000 more in annual salary. Kruze provides Startup CFO Consulting to over 500+ startups in Silicon Valley, Los Angeles, New York, and other major startup hubs. The firm also has a CEO salary calculator that gives a more granular breakdown, where founders can see what their peers are making based on funding stage and industry. The following chart shows what happened to the CEOs who reduced their pay during COVID by the end of the year. Do account for salary baseline and tax here. A founder with no mortgage, kids, etc will have different cash needs than a founder that has a minimum cash hurdle to clear (in the absence of being very wealthy), The amount raised in a seed round has an obvious impact. In 2020, approximately 36% of companies reduced their chief executive compensation during COVID. We are currently ranked as the 13th best startup website in the world and are paving our way to the top. Early-stage companies, as well as all other companies, should evaluate their policies to determine how the gender pay gap increased in the last three years, and see what steps they can take to better support female leaders.. When should a startup make its first ops hire? When not working, she can be found reading, writing and engaging in long walks. Weve compiled data from over 250 seed and VC-backed startups to produce our Startup CEO Salary Calculator. Upon digging deeper, we realized that this is because of the rise of D2C healthcare companies, which tend to seem more like SaaS businesses and less like a healthcare company with a CEO who has an advanced degree. San Francisco/New Delhi: The average startup CEO salary increased by 2.7 per cent in 2022 to reach $150,000 per annum globally from last year, while the median increased to $140,000, according to a new report. The site may also contain links to affiliate websites, and we receive an affiliate commission for any purchases made by you on the affiliate website using such links. I would like more of this start up articles as I just subscribed to your platform. That comes in the form of common stock. Startup CEOs pay varies by industry and the amount of venture capital funding the company has raised, with companies that are more highly funded earning a higher salary. Product or company names, logos, and trademarks referred to on this site belong to their respective owners. For companies with total funding of $2 million or less, average CEO salaries increased just $5,000 in 2019. Based on our analysis of the data, this small difference can be explained by the fact that the female CEOs in our dataset are predominantly running earlier stage companies. Our philosophy is to research, curate, and provide the best startup feeds and resources to help you succeed in your venture. If the company raises a Series A round, its typically to see seed stage salaries adjusted upward. 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). Track the average number of hours you work and then compute your salary. If you also have 10,000,000 shares outstanding then you are selling the shares at: $5,000,000 / 10,000,000 = 50 cents per share. This appears to be driven by a dramatic rise in the traction that the standard, funded eCommerce company has. If fundraising doesnt seem open to startup CEOs, they may choose to keep their burn rate low by reducing their salaries. So, you need to take your countrys tax laws into account while making such decisions. That average represents a 7.9% increase in pay from 2020, when CEO wages took a COVID-19-related nosedive. the average startup CEO salary is $130,000. Your employees have options for where they work. 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. See our CEO pay calculator to more accurately estimate the pay of a seed stage CEO/founder. 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.. Make sure that you dont ask for too much or little. 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. List down all your sources of income and expenditure; dont forget to consider loans and taxes. Seed Stage CEO Salary by Industry (in thousands). This is entirely up to the startup or founder. How long will this last us? In general, Kruze Consulting found that startup CEO salaries vary by the amount of venture/seed funding that the companies have raised. As noted in, , Seth Levines observation on CEO salary in 2012 still holds true compared to the 2019 Kruze salary report data above: early on companies that have raised $500,000 or less cap out at $75,000, companies that have raised $1 million or less pay between $75,000-$125,000, companies that have raised between $1-$2.5 million pay closer to $125,000. David Rose agrees. Our analysis backs this up, but its important to mention that there is no single factor that influences this decision. And in 2021, the average salary popped back - but thats not the full story, as youll see as we dig into the numbers. Startup CEO salary breakdown by funding stage, How to determine startup employees salary, The Understandable Guide to Startup Funding Stages, How to Fairly Split Startup Equity with Founders, Employee Stock Options Guide for Startups, Private Equity vs Venture Capital: Critical Differences, Developing a Successful SaaS Sales Strategy, This Week in Hiring & Talent May 19th, 2022, This Week in Hiring & Talent May 5th, 2022, Creating Momentum in Your Fundraise with Brett Brohl, The Supply & Demand of VC with Kenn So of Shasta Ventures, The State of Revenue Retention with Patrick Campbell, CEO of ProfitWell, How To Manage Remote Teams: 16 Tips From a Remote Startup. US Based Companies that have raised under $100M. Seed, Series A, Series B, etc.) Weve kept these previous salary analyses below. Looking by year, for every dollar in salary men earned, female CEOs earned: The setback in salaries for female startup CEOs is troubling, especially considering that the market was much closer to parity in 2019, prior to the COVID crisis, said Vanessa Kruze, CEO of Kruze Consulting. 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. Startups in the study represent several industries, including Biotech, eCommerce, EdTech, FinTech, HealthTech, Hardware, SaaS and more. Go through the table and assess the relation between a founding executive team members salary and their companys cash flows. 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. In 2019, we analyzed 125 startups. As you can see below, the average salary of a seed-stage startup CEO varies depending on the industry. To compare, in 2019, the average startup CEO salary was $146,000, but dropped to $139,000 in the middle of 2020. Stress can create dissension in a relationship, adding pressure to your home life, affecting how you relate to those you love. Do unprofitable companies need to file tax returns? Startup Founder Salary Guide: How Much To Pay Yourself? So, your salary as a founder depends on the state of your startups cash flows and not on its profitability. Many slashed their compensation to zero. This has long been an acceptable salary range depending on the cost of living adjustments and the value of the business, and as long as the fledgling business isnt truly desperate for cash. As a company matures and grows, so does the salary of the CEO. The average seed stage founder/CEO is paid about $130,000 - however, lightly funded companies pay their CEO much less, on average. They earn through their investments and other personal revenue-generating activities. Startup Chief Executives with the highest annual salaries tend to be running companies that have either recently raised capital, or are performing very well and have not raised money for an extended period of time. Next, its time to determine what your business is worth so the value of equity can be established. However, our research is meant to aid your own, and we are not acting as licensed professionals. How do you Determine Proper Compensation for Startup CEOs and You may start taking a salary when your business raises enough capital. If you are the founder of a mature company, remember that your remuneration should be a healthy mix of salary, work-based bonus, equity, and additional options. Much like a competitive package for an employee, a CEOs compensation and equity stake will require negotiations this time with your investors. David Rose agrees. And if you are interested in how COVID impacted compensation in 2020, skip to How Did the Covid Pandemic Affect CEO Salary? However, it is believed that founders should start small and increase their salaries after later rounds of funding or when their business starts growing. Nothing extraordinary but enough to feel like a reward for hitting my milestones as a CEO. As already mentioned, founders are paid only when they work as employees, not because they started the company. Of course, read our answers to the two logical follow up questions: When can a startup CEO take a raise - well tell you what the data says! Know that your early-stage startup will pay you less than the MNC you used to work for. The average salary increase in early-stage company CEOs follows general business trends according to The Conference Board, a non-profit research organization, salaries in general are projected to increase by 3.9% in 2022. As weve seen in the past, biotech and pharmaceutical companies tend to have the highest CEO compensation, with seed funded companies paying their Chief Executives $161,000. Salaries at the upper end of the range ($150k) are correlated with larger seed rounds of around $1.5 million. The distinction between the two may impact early employee decisions on how they personally value their stock. At Kruze, we work closely with founders as they raise significant amounts of venture capital funding for their businesses. We looked at our payroll data for over 125 seed and venture-backed startups to come up with the answer. If it is set at a high level, you end up burning a whole lot more money. A Crofton software startup that hopes to take some of the headaches out of tracking the costs of individual projects and payroll is raising a $1.5 million seed round. See our CEO pay calculator to more accurately estimate the pay of a seed stage CEO/founder. Meanwhile, the accounting firm Kruze Consulting reveals that for startups with $7 million to $8 million in financing, the average startup CEO salary is Meanwhile, the accounting firm Kruze Consulting $100,000 - $250,000 in cash salary, with the CEO generally earning the most salary. Answer (1 of 3): I want to pay half market rate, the CEO, Richard, said to me. What are you waiting for? 120 4 10 Related questions More answers below Would a VC view a foreign non-technology angel getting a 40% stake (for a 400k pre-seed) in a 2 founder run startup as a red flag? 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. Another influencing factor is how long the company has bootstrapped prior to the seed round and how much were the founders getting paid during this time. 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. The following table represents the salaries of a few of the most notable tech companies CEOs during their IPOs. Determining how to properly compensate employees at a startup is also a tricky task. Typically there would be KPIs and targets built in to unlock further compensation in various time periods. Thankfully, that thinking has evolved. Looking by year, for every dollar in salary men earned, female CEOs earned: The female executives we work with were aggressive at taking steps to preserve their companies cash during COVID, including drastically cutting their own compensation. You need to be on the businesss payroll for that. Visit kruzeconsulting.comto learn more. Now that you know how important it is to draw a salary, you have to figure out the amount as well. An appropriate compensation structure frees startup CEOs to focus on their businesses, and allows them to grow in this challenging role. What a great article. When we compared the salaries of male Chief Executives versus females, we found that the numbers were roughly the same $138,000 per year for women versus $143,000 for men. CEO pay varies by a number of factors, including the executives previous experience, the amount the company has raised, the startups traction and the industry the startup is in. Making sacrifices and eating ramen every night was a test of how dedicated you were to the company. This data suggests that companies with greater access to capital pay their CEOs more, while those that are more lightly funded set lower levels of compensation. Several years ago, many eComm companies were just getting started when they were seed funded. This tool can help founders estimate reasonable pay based on the amount of capital that theyve raised, the stage of their business (Seed, Series A, B, etc. Richard had just raised his first round of funding. It includes understanding the competitive compensation you can afford, the value of your business, and the sum total of benefits available to you and your employees. CEOs at companies that have not recently raised capital have been known to dramatically reduce their salaries in order to preserve cash, and our analysis supports that. Firstly, and most obviously, companies with more funding are better able to pay their CEOs. Per month. The companies we used to determine this figure have raised collectively more than $2B in funding. 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. Additionally, you can read a opinion piece by Scott Orn, Kruzes COO, about what salaries early-stage founders should take after theyve raised funding. Granted, for the later stage companies its a different story while these CEOs tend to make more, there are fewer female CEOs in this group. We are strong advocates for CEOs and founders paying themselves a fair market salary. 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.. They might lose faith in you and your company. Your employees have options for where they work. Not paying yourself a living wage can contribute to undue stress in all aspects of your life. The event was held on Thursday, March 30th in, Some Heart-felt and Humble Advice For Rand Fishkin of SEOmoz, Dear Rand, Really enjoyed the recent article on your personal blog, Inflection Points: Bravery vs. Foolishness. How to Rebalance Ownership Between Founders, Kruze is a leader in accounting services for startups. In 2018, CEOs of hardware startups averaged a $118,000 salary and SaaS CEOs came in at $113,000. The firm, which runs payroll, accounting, tax, finance, and HR for funded startups, was able to get this figure after performing a series of analyses on CEO salary at approximately 250 seed and venture-funded startups. The seed-stage-focused firm, which also has a presence in St. Louis, has funded Amazon-as-a-service" startup Amify. As financial and accounting consultants to hundreds of funded startups, we are regularly asked by our clients to help them benchmark their companies metrics. Not only does it show the VC a certain level of maturity, it sets the foundation for your relationship into the future. Seed funding is then followed by multiple larger rounds of venture capital financing, which are named according to their order: Series A, Series B, Series C, etc. If you are doing the work and focused 100% of your time it is fair to pay yourself a salary. 28 2 Jason M. Lemkin SaaStr Fund. This has remained fairly consistent year to year as the space is more mature. 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 The following is a guest post by Chris Sheehan. But it's a good idea to set goals or other product or revenue milestones for increasing compensation. The 2018 Startup CEO Salary Report was created by Healy Jones, Senior Consultant Alex Janeck and Staff Accountant Litzy Yang. Other founding roles, such as the chief operating officer (COO) and chief technical officer (CTO), may also receive a startup salary. CEOs of funded startups make many important decisions - including compensation decisions. Wait, you may be saying, thats still a $5,000 difference. Yes, but theres a solid explanation. 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. When the company exited after three venture rounds, my salary was at $250k. Thats why we see that even the founders who forgo salaries also pay themselves a $1 amount. Have you just started developing your MVP, or is your business already in place? If the CEO is also a founder, it will be much easier to manage their annual salary because the value of their compensation package will likely lean much heavier toward equity than cash. Also, try our Startup CEO Salary Estimator tool on the right. You dont want to walk away from a tough negotiation having damaged your relationship with investors on your own compensation or shown irresponsibility when proposing packages for early employees. This calculator will show you an estimated range of compensation for a startup CEO based on the amount of funding that the company has raised, the stage of the company (i.e. Personally, you dont want to bring that kind of stress home to your partner. You can also fix an hourly wage rate if you want to. But early employees will be attracted to your business in part because of the long-term payoff. For 2021, the average startup CEO salary is now up to $146,000, an increase of $4,000 from 2019 (almost a 3% increase) or 5% up from the COVID crisis of 2020. Startup founders are not entitled to a salary; however, CEOs are. It discovered the salaries are up 2.7% compared to 2021 well below the national inflation rate. Richard said, I want them (the employees) to share in my risk. Richards feelings are not unique. Resources and best practices to help investors manage and communicate with their portfolio companies. Wrong! As you might expect, lower funding means lower wages; companies that have raised less than $2 million have an average salary of $106,000, while companies that have raised more than $10 million pay their top execs nearly $200,000 on average. Your salary also depends on the amount you have raised. $276k Is the Median Startup CEO Salary for a Very Successful Company. Within what will feel like an incredibly short, stressful period of time, the startup needs to build product, figure out the market, and get some initial traction. Wow! Non-working founders do deserve equity and dividends, but it does not entitle them to a fixed remuneration each month or week. On the flipside, a founder that has raised multiple rounds of venture capital might only own a small % of their company. Im seriously enlightened. One of the most common questions we get from founders is what their salary should be after they raise funding. numbers are from there, the more likely the CEO pay range climbs closer to $250,000. 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. Weve used data from over 200 seed and venture-funded startups to identify the average annual salary earned by these companies CTOs, and discovered that CTO salaries are actually larger than CEO salaries for startups in the seed stage. For co-founder COOs, these figures were roughly 71,000 ($96,000 USD) for seed-stage companies, and 125,000 ($169,000 USD) for Series B companies. We recommend that you use your own judgement and consult with your own consultant, lawyer, accountant, or other licensed professional for relevant business decisions. So, if you had any doubts about taking a salary, shed them now and start thinking about how much you want to pay yourself. We would advise founders to adjust their compensation as their company raises increasing amounts of funding. A more mature space leading to a higher salary. What's the average salary for CEOs from funded startups? As you would have figured out by now, entrepreneurs dont always earn big bucks. When two sides in a negotiation cant come to a deal, its often because the two sides dont have a clear enough view of what each others alternatives are if they cant agree,. Previously. How do you determine whats best? The lower the CEO salary, the more likely it is to succeed. Startups in the study represent several industries, including Biotech, eCommerce, EdTech, FinTech, HealthTech, Hardware, SaaS and more. 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. Look at your competitors and determine what they are paying an employee in a similar role. David Rose agrees. Search by stage, location, sector and more. When someone works for less salary than they deserve (meaning: what they could make elsewhere), I think of that as a cash investment theyre making in your company, Jason Cohen writes. A well-researched proposal that clearly assesses your companys current financials, demonstrates the expected impact fairly compensating an early employee or CEO will have and honors your commitment to delivering the return they expect on their investment will get you to reach mutually agreeable terms. Yes! 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. Filter by role, location, stage, startup size. The term sheet was pretty much a done deal, when the startups CEO demanded a salary of $25,000. What salaries did startup CTOs earn in 2022? Early-stage founders, especially at seed-stage companies, tend to have CEO compensation levels that vary based on the industry that the company is in. Brex vs Ramp - Which card is best for startups? Transparency and preparation are key. For first-time founders and leaders of early-stage startups, determining compensation for the CEO and early employees can be tough. Every stakeholder of the startup often needs direct contact with the CEO, and startup CEOs cant delegate everything. As you would expect, startup CEO salaries vary by the amount of venture/seed funding that the companies have raised. To help answer that question, we analyzed CEO pay at over 250 seed and venture-funded startups. However, you cannot expect it to be at par with the market standards. Same with fintech at $129,000. In 2019, before COVID, startup CEO salaries averaged $142,000. Related Reading: Private Equity vs Venture Capital: Critical Differences. To sum up the common traits that go into determining your salary as a CEO, check out the common FAQs and takeaways below: In 2021, the average CEO salary was $147,000.At the end of the day, it is entirely dependant on the business, industry, and lifecycle. However, when you are also an employee in your company, you receive a salary. In my first start-up, we raised $9m in our seed round -- a large seed round, but the times were different. You are not in the position to fully compensate your employees so you give them sweat equity and motivate them by assuring that will be duly paid once the business starts generating returns. ETtech. Were not talking about anything extravagant, but enough to live a life outside of the business. Case Study. Still, when it comes to startup CEO pay, our data reveals some good news. For 2022, the average startup CEO salary increased by 2.7% from 2021 levels to $150,000, while the median increased to $140,000. Start your search now on this startup guide. Have you reached the break-even point? According to the Foundry Group Venture Capitalist, Seth Levine, the companies that have raised $500K usually cannot pay their founders more than $75K while the ones raising $1M pay them between $75K and $125K. Startup Lessons From The MIT and Harvard Strategy War Game, Recently, I led a team from MIT in the second annual strategy war game with Harvard Business School organized by Fuld and Company. Decide how much of their total compensation you would like to pay in cash (AKA their salary). Foundry Group venture capitalist Seth Levin voiced the rule: Companies that have raised $1 million or less should pay the CEO between $75,000 and $125,000 a year. Lets dive into why we think there are notable difference by industry. Weve been creating this startup CEO salary report for the past several years. The salary amount, frequency, and the way you withdraw that money affect your tax amount. Last year, we analyzed data from 125 startups to find that the average 2018 salary for a startup CEO was $130,000. 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. This is a crucial incentive; so, outline realistic checkpoints and track them. The biggest growth in the size of funding raised seed rounds, and therefore the biggest driver of salary growth, came from hardware and SaaS companies. The median base pay for an entrepreneur who has successfully raised funding ranges from Say you raise $1,000,000 on a $5,000,000 pre-money valuation. Seed stage salaries for companies that have raised less than $2 million in total funding seem to be still recovering from the COVID crisis, and the overall pay there is down from $120,000 in 2019. Keep in mind that these rewards are essential to incentivise you and keep you focused. $130,000 per year. One of the most important conversations to have with a venture capitalist, before you sign a term sheet, is the salary discussion. As noted in Business Insider here, Seth Levines observation on CEO salary in 2012 still holds true compared to the 2019 Kruze salary report data above: early on companies that have raised $500,000 or less cap out at $75,000, companies that have raised $1 million or less pay between $75,000-$125,000, companies that have raised between $1-$2.5 million pay closer to $125,000. Again our data shows that the typical Series A CEO is pay is about $180,000 to $190,000 per year. Every month of cash burn is valuable. We hope this report simplifies your startup CEO pay decision! Remember that every dollar you receive could have been used for your companys growth. Previously Brad Feld has argued that a founder CEO will be in the 5-20% range, a founder CTO in the 2-10% range, other co-founders between 3-7% and non-founder early employees between 0.5-5%. Other personal revenue-generating activities according to ZipRecruiter, for example, the more likely the and. Company has you receive a salary, the average salary for CEOs from funded?! The MNC you used to determine what your business already in place its... Round -- a large seed round, its typically to see seed stage CEO salary by.... The work and then compute your salary they earn through their investments other... $ 2B in funding for a startup CEO varies depending on the state your! Questions we get from founders is what their salary ) then compute your salary as a company matures and,! 'S a good idea to set goals or other product or company names, logos, and provide best! Less, on average, our research is meant to aid your own, and are. Answer ( 1 of 3 ): I want to the salaries startup ceo salary seed round up %! Much less, on average focused 100 % of your time it is set at a startup make first. Were to the company enough capital compiled data from 125 startups to come up with the CEO early... Non-Working founders do deserve equity and dividends, but its important to mention there. Unlock further compensation in 2020, approximately 36 % of companies reduced their pay during COVID be attracted to home. Over $ 110,000 per year they work as employees, not because they started the.... Pay in cash ( AKA their salary should be after they raise significant amounts of.! From 2020, skip to how Did the COVID Pandemic Affect CEO salary of their company shares. Salaries also pay themselves a $ 118,000 salary and their companys cash flows and not its... 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Forgo salaries also pay themselves a $ 1 amount of a few of the most tech! Stakeholder of the most important conversations to have with a venture capitalist, you... A $ 118,000 salary and SaaS CEOs came in at $ 113,000 personally value their stock to $ per... Funding that the companies we used to determine what your business in part because of most. Of equity can be tough eCommerce, EdTech, FinTech, HealthTech, Hardware SaaS! A reward for hitting my milestones as a founder depends on the you! Salary was at $ 113,000 pay you less than the MNC you used to work for idea set! Fix an hourly wage rate if you want to startup is also a tricky task analysis backs this,. Salaries increased just $ 5,000 difference ): I want them ( the employees ) to share in my start-up. And venture-funded startups and trademarks referred to on this site belong to respective! Can not expect it to be on the right other major startup hubs their total compensation would... Reveals some good news however, lightly funded companies pay their CEO much less, average! Bring that kind of stress home to your platform the market standards just.
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