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. Wow your investors with data-driven updates that drive interaction. 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. Come on! However, you cannot expect it to be at par with the market standards. Below is our 2018 study, which we have left online for reference. Your salary also depends on the amount you have raised. The bottom line is: Align everything in your life. Percent of CEOs who deceased salary during COVID who changed salary by year end. We analyzed the pay of over 250 startups - and the average startup CEO pay is $146,000, up 5% from the prior year. This has remained fairly consistent year to year as the space is more mature. For 2022, we analyzed CEO pay at over 250 seed and venture-funded startups, and we noticed an interesting trend taking shape. While the overall average emerging company CEO salary moved up, there is a bifurcation in salary trends based on how much capital the companies raised. Also, those who have families to take care of, are paid more than college students sharing an apartment. 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. 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. What are you waiting for? This year, we expanded the data to over 200 of our seed and venture-backed clients and found that in 2019, CEO salaries rose to an average of $142,000 annually, nearly a 10% increase. 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. Professionally, you want to be on top of your game when it comes to making the right decisions for your company. You will want your boards input on this process early on., Related Reading: Employee Stock Options Guide for Startups, Now comes the really hard part. When not working, she can be found reading, writing and engaging in long walks. As you would have figured out by now, entrepreneurs dont always earn big bucks. There are a variety factors that drive the difference in founder/CEO pay by industry. 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. CEOs are always on duty, and startup CEOs are even more in demand than the leaders of mature businesses. Determine the gap between their salary and total compensation. Tax Credit Center - Which of the 700+ Credits Are Best? 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. The CEO's salary sets a cap for everyone else. Expect us to publish future studies on other startup executive pay. Seed Stage CEO Salary by Industry (in thousands). 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. Some families live on that," says VC Sean Owen. Same with fintech at $129,000. Some families live on that," says VC Sean Owen. We may monetize some of our links through affiliate advertising. 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. 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. *. Very few entrepreneurs have the courage to be that transparent. Next, its time to determine what your business is worth so the value of equity can be established. 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.. is pretty wide and is more driven by the absolute dollar amount raised, pay does vary by stage. Not only does a market salary enable you to cover the cost of living and a good housing arrangement, it also ensures the financial stress doesnt lead to bad decisions at the company. Personally, you dont want to bring that kind of stress home to your partner. The median base pay for an entrepreneur who has successfully raised funding ranges from So, if a founder or cofounder works as their startups CEO, COO, CTO, CMO, or in any other role, they deserve remuneration for their services. Below is our 2019 study, which we have left online for reference. It can be difficult to place a number here as the value of the company is solely on paper. Markets that are receiving more funding and exiting at higher clips generally warrant a higher salary. 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 Seed Stage Ceo Salaries by Industry (in thousands). Some families live on that," says VC Sean Owen. Your employees have options for where they work. In 2022, female CEOs made $20,000 less than males. 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. See our CEO pay calculator to more accurately estimate the pay of a seed stage CEO/founder. Meanwhile, the accounting firm Kruze Consulting Answers to hundreds of startup accounting, finance, HR and tax Q's, Expert startup accounting advice (and more), Top Financial Tips and Resources for Startups, Tips for setting up scaleable financial systems, iCals with federal, state and local compliance deadlines, See more of the best pitch decks ever used, After working with hundreds of startups, we picked the best credit cards. Also, make sure that you consider all the factors mentioned above before deciding on your salary. 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. While they initially dipped at the start of COVID, the average CEO salary is now hovering around $146,000 a year. It discovered the salaries are up 2.7% compared to 2021 well below the national inflation rate. Startup Founder Salary Guide: How Much To Pay Yourself? As already mentioned, founders are paid only when they work as employees, not because they started the company. The 2021 number is 5% higher than the typical Chief Executive Officer pay at an early-stage company in 2020, and so macro trend of CEO compensation rising over time continues. , 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. And in 2021, the average salary popped back - but thats not the full story, as youll see as we dig into the numbers. 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.. For venture-backed companies, you can find this answer through an official 409A process or less formally (as. ) Weve compiled data from over 250 seed and VC-backed startups to produce our Startup CEO Salary Calculator. Many of those options will offer greater short-term rewards, while you are likely to offer below market value in cash compensation. 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. 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. You have to be able to afford the talent youre recruiting without cutting your financial runway unnecessarily fast for some quick-to-compete cash package. One of the most important conversations to have with a venture capitalist, before you sign a term sheet, is the salary discussion. When a seed round raises $5 million instead of $500,000, the temptation to excessively hire and spend increases significantly. One of the places to start when evaluating your CEO salary is by evaluating the benchmarks and peers in your industry. And, while we did see many of startups with male leaders also reduce their pay, we arent quite sure why females were more likely to take a pay cut during the pandemic.. WebAccording to estimates by 80,000 Hours, for example, startup founders in Y Combinator pay themselves around $50,000 in salary. Brex vs Ramp - Which card is best for startups? Male CEOs saw a $5,000 salary increase. for determining the equity of your first few dozen employees based on the expected value they bring to your business. For 2022, the average startup CEO salary increased by 2.7% from 2021 levels to $150,000, while the median increased to $140,000. The average startup founder salary in the seed round is $100,000. SaaS was the top performing industry by CEO salary in 2020. WebIn my first start-up, we raised $9m in our seed round -- a large seed round, but the times were different. This is a crucial incentive; so, outline realistic checkpoints and track them. Because of this, startup founder salary is a highly debatable topic. On the flipside, a founder that has raised multiple rounds of venture capital might only own a small % of their company. 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? 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. Yes! The increase in CEO pay for 2022 brings back the overall, up and to the right trend that weve observed in the average CEO (and founder) pay since 2018. Build relationships, manage a fundraise and build your business. Several years ago, many eComm companies were just getting started when they were seed funded. So, its better to invest $45K and let the additional $5K stay in your bank account. 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. For rounds of 150k or below, around half of founders secure a salary. However, our research is meant to aid your own, and we are not acting as licensed professionals. We feel there are three primary drivers for this behavior, said Healy Jones, VP of Financial Planning & Analysis for Kruze. 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). Every year we analyze CEO pay at hundreds of early-stage companies to try to help our clients set reasonable salaries and compensation for themselves. Market value for equity is dynamic though and the necessary points to attract an individual employee can vary. How does CEO pay vary by the amount of venture capital raised? 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. One of the easiest ways to do that is pay yourself the right amount. In 2019, before COVID, startup CEO salaries averaged $142,000. So, you need to make a fair assessment of your current financial situation before talking to investors about salary. They span the typical range of U.S. startup industries including biotech, eCommerce, fintech, hardware, SaaS and more. 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. Chris is a seed stage VC and angel investor at CommonAngels. Per month. Sequential rounds gave me a small bump in salary. Also, see if you can cut down on unnecessary expenditures. Who is the highest paid person at a startup, plenty written about the pay disparity between women and men, How to Pay International Employees & Contractors. The VCs set my salary without discussing or consulting with me (I know, weird, Keep in mind, the median salary of $276k is for the CEO of a company about to go public. 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. Non-working founders do deserve equity and dividends, but it does not entitle them to a fixed remuneration each month or week. On, Stating the obvious, salary needs can vary widely. The following is a guest post by Chris Sheehan. My prior salary as a VP before the company had been $150,000, and they raised it to $180,000, with a performance-tied bonus. 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. We recommend that you use your own judgement and consult with your own consultant, lawyer, accountant, or other licensed professional for relevant business decisions. We feel there are three primary drivers for this behavior, said Healy Jones, VP of Financial Planning & Analysis for Kruze. By the way, to see some survey data on what other people think the founder/CEO salary should be, check out the OnStartups poll on founder salary. Salaries at the upper end of the range ($150k) are correlated with larger seed rounds of around $1.5 million. You might feel the same way. Read our tips now. 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. Flipside, a founder that has raised multiple rounds of 150k or below, around of! Excessively hire and spend increases significantly venture capital raised amount of venture capital raised and! Monetize some of our links through affiliate advertising of around $ 146,000 a year employee vary! Current financial situation before talking to investors about salary initially dipped at the upper end of the ways. Difficult to place a number here as the value of the range ( $ 150k ) are correlated larger! 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