Even Amazons founder, Jeff Bezos earned around $81,840 as a salary in 2020. 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. 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. The average seed stage founder/CEO is paid about $130,000 - however, lightly funded companies pay their CEO much less, on average. Secondly, the increased CEO salaries recognizes that these CEOs are more effective at fundraising, much like how compensation increases for CEOs in mature companies generating greater profits. Startup compensation guide: see thousands of startup salary and equity data points. Photo: Supplied. As a founder and/or CEO, you also want to pay yourself enough to get by and prevent money from being an unnecessary distraction. Anyway, even when the business starts growing, it wont pay you much in the form of salary. 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. Also, those who have families to take care of, are paid more than college students sharing an apartment. In 2019, before COVID, startup CEO salaries averaged $142,000. 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. There is also a shifting trend towards famous entrepreneurs like Mark Zuckerberg, Evan Spiegel, and Jack Dorsey taking a $1 salary. Your employees have options for where they work. Theres been plenty written about the pay disparity between women and men in the U.S. And when it comes to the startup world, that pay gap has remained stubbornly high. I asked Richard why? In 2019, we analyzed 125 startups. Having the above questions answered will help. 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%. Did you know even money losing startups can get up to $250,000? 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, Tim Jackson writes. Your employees have options for where they work. How Did the Covid Pandemic Affect CEO Salary? How To Make An Infographic: Step-By-Step Guide, 10 Proven Ways To Make Money With Your Car, Presentation Tips: 11 Simple Yet Effective Strategies. 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. While they initially dipped at the start of COVID, the average CEO salary is now hovering around $146,000 a year. Companies that raised between $2 million and $5 million saw almost an 8% increase in Chief Executive Officer salaries. As a startup founder, you must understand that entrepreneurship is not a bed of roses. , 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. Suppose you put $50K in a business and decide to carve $5K as salary, you effectively put $45K into the business, right? One of the places to start when evaluating your CEO salary is by evaluating the benchmarks and peers in your industry. It is typically seen that founders who have alternate sources of income are not paid as much as the others. The reality is most venture-backed startup CEOs typically make somewhere between $75,000-250,000. You may hire an accountant for assistance. It [a low salary] aligns interest with the equity holders. And, if youre making a market salary, you wont feel compelled to make the wrong decision for the company. 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 pay varies by a number of 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. How much can your startup save in payroll taxes? In practice we have found that if you only ask one question, ask that. The trend of increasing compensation being tied to increasing levels of capital raised persisted - as expected. During COVID, the average startup CEO salary dipped 2% to $139,000, but bounced back to $146,000 at the beginning of 2021. Seed Stage CEO Salary by Industry (in thousands). See our CEO pay calculator to more accurately estimate the pay of a seed stage CEO/founder. As you would have figured out by now, entrepreneurs dont always earn big bucks. Every month of cash burn is valuable. In 2022, chief executives at early-stage companies that have raised over $10 million in financing were paid just under two hundred thousand dollars a year, $199,000. However, it is believed that founders should start small and increase their salaries after later rounds of funding or when their business starts growing. Finally, startup culture can generate pressure to not take salaries. Go through the table and assess the relation between a founding executive team members salary and their companys cash flows. How to Rebalance Ownership Between Founders, Kruze is a leader in accounting services for startups. Staying within a competitive range is needed to appease your current board and attract new investors (for example Peter Thiel has publicly stated he passes on any startup saying its CEO more than $150,000). As a CEO, you also want to examine your own motivations in a negotiation, especially if you are attempting to increase your salary or equity stake. Non-working founders do deserve equity and dividends, but it does not entitle them to a fixed remuneration each month or week. Owners of mature companies can pay themselves more than growth-stage startup founders even when both generate good revenue. So, you need to make a fair assessment of your current financial situation before talking to investors about salary. The table below shows average and median salaries since 2018. Thanks for the article. Read our tips now. 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. Filter by role, location, stage, startup size. Secondly, the increased CEO salaries recognizes that these CEOs are more effective at fundraising, much like how compensation increases for CEOs in mature companies that generate greater profits., Finally, startup culture can generate pressure to not take salaries, Jones said. Remember that you have to account for all of them when deciding how much to pay yourself as a startup founder. Wait, you may be saying, thats still a $5,000 difference. Yes, but theres a solid explanation. We may monetize some of our links through affiliate advertising. When not working, she can be found reading, writing and engaging in long walks. Much like a competitive package for an employee, a CEOs compensation and equity stake will require negotiations this time with your investors. 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. 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. Thats why its critical you have the salary discussion before you sign the term sheet and close on that investment. It discovered the salaries are up 2.7% compared to 2021 well below the national inflation rate. Resources and best practices to help investors manage and communicate with their portfolio companies. Working her way up the success ladder and her personal philosophy textbook, Kavvya believes that a good conversation is worth more than a good book. Some families live on that," says VC Sean Owen. 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. You need to be on the businesss payroll for that. Wow! The best way is to tie your remuneration to achievable growth milestones and work accordingly. We hope this data will help other early-stage businesses prepare their budgets! The bottom line is: Align everything in your life. If the company raises a Series A round, its typically to see seed stage salaries adjusted upward. However, do remember that your startup wont give you as much as a mature competitor does to its executive team members. The analysis comes from an anonymized dataset comprising more than 250 venture-funded companies and representing more than $2 BN in funding. Seed, Series A, Series B, etc. 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. And in 2021, the average salary popped back - but thats not the full story, as youll see as we dig into the numbers. This could be because there is more capital, or because VCs have witnessed exactly what happens when a founder is under enormous stress and pressure in their personal and professional life: they make bad decisions and things fall apart. Thats why we see that even the founders who forgo salaries also pay themselves a $1 amount. See our CEO pay calculator to more accurately estimate the pay of a seed stage CEO/founder. On the other hand, Mukesh Ambani paid himself INR 4.36 crores in the financial year 2019-2020, that is, around $596,000. 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. : The average seed stage founder/CEO is paid about $130,000 - however, lightly funded companies pay their CEO much less, on average. Founders of funded startups may start to pay themselves provided that they are on the payroll. Determine the gap between their salary and total compensation. Determining how to properly compensate employees at a startup is also a tricky task. This chart breaks down seed funded CEO salary by industry: Raise capital, update investors and engage your team from a single platform. Remember that every dollar you receive could have been used for your companys growth. I know a couple of cases where if bigger seed rounds had been raised, the founders would probably have bumped up their salaries a little. The same trend was true for the median startup CEO salary. Theyre responsible for fundraising, reporting to the board and other stakeholders, providing direction to the company, and making operational decisions. If the investment is up to $2.5 million, the CEOs salary should be $125,000. Sequential rounds gave me a small bump in salary. Expect us to publish future studies on other startup executive pay. This can lead to less time with your loved ones, which can lead to resentment. Brex vs Ramp - Which card is best for startups? Personally, you dont want to bring that kind of stress home to your partner. See our CEO pay calculator to more accurately estimate the pay of a seed stage CEO/founder. 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. Have you reached the break-even point? 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