Female startup CEOs continue to lag behind their male counterparts in salary in 2022. Thiel was hesitant to answer, but eventually said $100-125k. Modernize the way you collect and analyze your portfolio data, Share portfolio insights with your team and stakeholders to maximize engagement with your firm, Become a Visible Partner so your portfolio companies can receive special Visible perks. 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. 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. The companies we used to determine this figure have raised collectively more than $2B in funding. 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! Your request has been submitted.We will contact you shortly. On the flipside, a founder that has raised multiple rounds of venture capital might only own a small % of their company. It is typically seen and suggested that founders start small and raise their salaries after their business hits a few specified milestones or after each round of funding. However, successful founders do tend to establish consistent tactics early on and lean on research to find their solution. What salaries did startup CTOs earn in 2022? List down all your sources of income and expenditure; dont forget to consider loans and taxes. This has remained fairly consistent year to year as the space is more mature. 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. Certainly, there are a few other factors that will go into a startup founders salary as well. potential bonus money of $0 - $100,000 and equity (ranging from less than 1% - 20%). Seed Stage CEO Salary by Industry (in thousands). For the most lightly-funded tech companies, the concept of ramen profitability encourages founders to take no salary to keep expenses minimal and make the company more attractive to investors. In 2019, we analyzed 125 startups. Determining how to properly compensate employees at a startup is also a tricky task. David Rose agrees. As your company grows, and the chances of success and stability increases, then founders can increase their salary compensation over that period. Salaries at the upper end of the range ($150k) are correlated with larger seed rounds of around $1.5 million. Sometimes, too much profit on the balance sheet stirs gossip so it becomes mandatory for founders to take a decent remuneration even when they have enough money to live without it. Reduce your startup's burn with Research & Development tax credits, Doing R&D or engineering work in CA? Visit kruzeconsulting.comto learn more. You can also fix an hourly wage rate if you want to. For example, if you have a 1% equity stake in a startup valued at $100M, which eventually IPOs at $1B, your stake will be worth 1% * $1B * dilution rate dilution rate varies, but a rule of thumb is to assume 10-25% per funding round. Early employees usually come in shortly after a seed round, and seed round valuations average about $5.3m. Tax Credit Center - Which of the 700+ Credits Are Best? Startup accounting firm Kruze Consulting just updated its annual CEO salary reportand has some interesting insights to go with it. And, not surprisingly, compensation is one of the most frequent questions. Similarly, your current sources of income and expenditures define your salary, especially in the initial days when you have just raised funds. Male CEOs saw a $5,000 salary increase. Other founding roles, such as the chief operating officer (COO) and chief technical officer (CTO), may also receive a startup salary. As most CEOs and founders know, launching a startup means working long hours, dedicating time and thought to the business success. The term sheet The average CEO pay for seed funded startups is $119,000 - but it does vary by industry. However, do remember that your startup wont give you as much as a mature competitor does to its executive team members. This is entirely up to the startup or founder. *Who is the highest paid person at a startup - see who really gets (cash) compensation at an early-stage company! 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. Say you raise $1,000,000 on a $5,000,000 pre-money valuation. Below is our 2019 study, which we have left online for reference. Companies that raised between $2 million and $5 million saw almost an 8% increase in Chief Executive Officer salaries. The following year average CEOs salaries for women dropped by 30%, from $138,000 to $101,000, and still has not rebounded from that drop. At any moment, executives or team members may own public or private stock in any of the third party companies we mention. With the financial stress that comes with running a startup, the last thing a startup CEO or founder should be worrying about is how theyre going to live day-to-day. Go through the table and assess the relation between a founding executive team members salary and their companys cash flows. To help answer that question, we analyzed CEO pay at over 250 seed and venture-funded startups. : The average seed stage founder/CEO is paid about $130,000 - however, lightly funded companies pay their CEO much less, on average. As already mentioned, founders are paid only when they work as employees, not because they started the company. Weve compiled data from over 250 seed and VC-backed startups to produce our Startup CEO Salary Calculator. The term sheet was pretty much a done deal, when the startups CEO demanded a salary of $25,000. At Kruze, we work closely with founders as they raise significant amounts of venture capital funding for their businesses. 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. For your first key hires, three, five, maybe as much as ten, you will probably not be able to use any kind of formula, Fred Wilson writes. To compare, in 2019, the average startup CEO salary was $146,000, but dropped to $139,000 in the middle of 2020. 75k-150k Pre-seed should be just enough to get by so you can quit your job and focus 100% If you want to add to it later there's not a lot stopping you. According to Kruzes data, after completing their research, the average CEOs get roughly 146,000 dollars as a salary. Photo: Supplied. Wow your investors with data-driven updates that drive interaction. is pretty wide and is more driven by the absolute dollar amount raised, pay does vary by stage. 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. The role of the compensation committee can vary, from making recommendations to the board on executive salaries, bonuses (and option grants) to having authority to set executive salaries. See if you are eligible for a salary or not. Startups in the study represent several industries, including Biotech, eCommerce, EdTech, FinTech, HealthTech, Hardware, SaaS and more. , 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. This will help you avoid future hassles. Profit-generating startups are a rare sight. Startups with $10 million or more in funding saw their average Chief Executives pay rise 8% from $160,000 in 2018 to $173,000 in 2019. 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. 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. However, during the COVID pandemic in 2020 the pay gap expanded again throughout corporate America, and our research on startup companies also reflects that trend. They span the typical range of U.S. startup industries including biotech, eCommerce, fintech, hardware, SaaS and more. This makes it important to account for the duration that you work when calculating your salary. The distinction between the two may impact early employee decisions on how they personally value their stock. It discovered the salaries are up 2.7% compared to 2021 well below the national inflation rate. Read our tips now. For rounds of 150k or below, around half of founders secure a salary. As you would expect, startup CEO salaries vary by the amount of venture/seed funding that the companies have raised. Therefore, the assessment of your companys present state is somewhat important when determining your salary. How Much Should A Startup Founder/CEO Pay Herself? US Based Companies that have raised under $100M. 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. To understand what happens when new equity is issued, a simple example helps. That average represents a 7.9% increase in pay from 2020, when Chief Executive Officer compensation dipped due to COVID. Your employees have options for where they work. *. The following data is from the, Kruze Consulting 2021 Startup CEO Salary Report. The seed-stage-focused firm, which also has a presence in St. Louis, has funded Amazon-as-a-service" startup Amify. $276k Is the Median Startup CEO Salary for a Very Successful Company. CEO Salary by Total Funding Raised - 2022. 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. You may start taking a salary when your business raises enough capital. What's the average salary for CEOs from funded startups? As financial and accounting consultants to hundreds of funded startups, we are regularly asked by our clients to help them benchmark their companies metrics. 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. Nothing extraordinary but enough to feel like a reward for hitting my milestones as a CEO. Is it wise to pay yourself when your startup demands this many resources? For example, if a founder is headquartered in Silicon Valley their cost of living is higher and likely requires a higher salary.. The analysis comes from an anonymized dataset comprising more than 250 venture-funded startups and representing more than $2.5 billion in funding. 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. As a startup founder, you must understand that entrepreneurship is not a bed of roses. Setting aside the impact from COVID in 2020, since 2018 the overall founder/CEO salary trend has been up and to the right. 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