They span the typical range of U.S. startup industries including biotech, eCommerce, fintech, hardware, SaaS and more. Have you reached the break-even point? You are probably eligible, Hiring veterans and felons? When a seed round raises $5 million instead of $500,000, the temptation to excessively hire and spend increases significantly. In 2020, we saw salaries decline at the height of the covid pandemic. In practice we have found that if you only ask one question, ask that. Weve been tracking this data for several years, and 2020 was the only year that weve seen a dip in the standard CEO pay. 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. 28 2 Jason M. Lemkin SaaStr Fund. Also, when founders salaries are scooped out of the treasury, the startup is left with fewer resources to function on. Co-founder/CEO at EchoSign (acq'd by Adobe), Upvoted by Oliver Emberton , Founder of Silktide and What are you waiting for? And if you are interested in how COVID impacted compensation in 2020, skip to How Did the Covid Pandemic Affect CEO Salary? 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? Thats why its critical you have the salary discussion before you sign the term sheet and close on that investment. The seed-stage-focused firm, which also has a presence in St. Louis, has funded Amazon-as-a-service" startup Amify. Photo: Supplied. For venture-backed companies, you can find this answer through an official 409A process or less formally (as. ) Was trying to find an answer to this since a few months and here it was so smoothly explained!!! How does a cash package for X employees change this? Case Study. Meanwhile, those of SaaS companies made on average $113,000 in 2018, which rose 7% to $121,000 in 2019. Other founding roles, such as the chief operating officer (COO) and chief technical officer (CTO), may also receive a startup salary. There is also a shifting trend towards famous entrepreneurs like Mark Zuckerberg, Evan There are a variety factors that drive the difference in founder/CEO pay by industry. Even Amazons founder, Jeff Bezos earned around $81,840 as a salary in 2020. One trend remained the same as last year: the more you raise, the more you get paid. As companies mature, its typical that a compensation committee is formed by non-management board members. It can be difficult to place a number here as the value of the company is solely on paper. Seed, Series A, Series B, etc. Please quote the information above when referring to 2020 - 2021 data. 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. In 2022, female CEOs made $20,000 less than males. Do account for salary baseline and tax here. When the company exited after three venture rounds, my salary was at $250k. 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. WebAccording to ZipRecruiter, for example, the average salary for the position of startup CEO is just over $110,000 per year. 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. 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. Kruze Consulting continues to advise founders to accept salaries as soon as theyve acquired funding. Firstly, and most obviously, companies with more funding are better able to pay their CEOs. Non-co-founder COOs at seed-stage startups earn an average salary of 94,500 ($128,000 USD as of writing). 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. While a very small salary may lead you to starve and hamper your productivity, a huge sum will give the impression that you are more interested in filling your own pockets than working for the company. Some families live on that," says VC Sean Owen. Seed Stage CEO Salary by Industry (in thousands). So, ask only for the amount that you need. How to Calculate Your Startup Founder Salary? 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. CEO salaries in the Biotech and Healthcare industries tend to average more than those in other industries. Did you know even money losing startups can get up to $250,000? 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. Certainly, there are a few other factors that will go into a startup founders salary as well. 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%. Your employees have options for where they work. Kruze Consulting expanded its salary research in 2022 to include the average salaries paid to Chief Technology Officers (CTOs). As the urgency of the COVID situation decreased, and many early-stage companies saw their financial situation stabilize, a number of the companies that reduced their executive pay reversed the situation. Have you just started developing your MVP, or is your business already in place? We analyzed the pay of over 250 startups - and the average startup CEO pay is $146,000, up 5% from the prior year. 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. Brex vs Ramp - Which card is best for startups? Look at your competitors and determine what they are paying an employee in a similar role. 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. 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. 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). In 2019, before COVID, startup CEO salaries averaged $142,000. Because of this, startup founder salary is a highly debatable topic. 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. Suppose you have just raised capital and are using it for the development of business. 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. For venture-backed companies, you can find this answer through an official 409A process or less formally (as Fred Wilson proposed in 2010) by using the valuation of your last financing round or the most recent offer you received to purchase your business. Some families live on that," says VC Sean Owen. Now that you know how important it is to draw a salary, you have to figure out the amount as well. As your company grows, and the chances of success and stability increases, then founders can increase their salary compensation over that period. 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. Even giants like Google and Amazon took years before becoming profitable and even then, their founding workers take salaries. 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. This is an especially important question to answer when youre trying to hire your first employees. Transparency and preparation are key. 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. 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. Thankfully, that thinking has evolved. Same with fintech at $129,000. Male CEOs saw a $5,000 salary increase. Not paying yourself enough can turn you into a bad decision-maker. However, successful founders do tend to establish consistent tactics early on and lean on research to find their solution. Previously. Start your search now on this startup guide. The reality is most venture-backed startup CEOs typically make somewhere between $75,000-250,000. 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. Even Amazons founder, Jeff Bezos earned around $81,840 as a salary in 2020. What's the average salary for CEOs from funded startups? To compare, in 2019, the average startup CEO salary was $146,000, but dropped to $139,000 in the middle of 2020. Much like a competitive package for an employee, a CEOs compensation and equity stake will require negotiations this time with your investors. But bringing in non-founders takes actual dollars and requires confronting these tough questions: how much money do we have? WebSequential rounds gave me a small bump in salary. The Columbus, Ohio-based startup also recently closed an oversubscribed $4M series seed round led by Tamarind Hill, a venture capital firm investing in tech-driven 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. Founders are paid only when they work as employees. Kruze provides Startup CFO Consulting to over 500+ startups in Silicon Valley, Los Angeles, New York, and other major startup hubs. is pretty wide and is more driven by the absolute dollar amount raised, pay does vary by stage. 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. As a founder and/or CEO, you also want to pay yourself enough to get by and prevent money from being an unnecessary distraction. While the spread of compensation by stage of financing (i.e. by using the valuation of your last financing round or the most recent offer you received to purchase your business. They might lose faith in you and your company. Professionally, you want to be on top of your game when it comes to making the right decisions for your company. 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 Market value for equity is dynamic though and the necessary points to attract an individual employee can vary. 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.. 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. And, if youre making a market salary, you wont feel compelled to make the wrong decision for the company. Design by Lucila Romero. The following steps will give you a broad idea of how to go about it. According to estimates by 80,000 Hours, for example, startup founders in Y Combinator pay themselves around $50,000 in salary. Anyway, even when the business starts growing, it wont pay you much in the form of salary. In fact, the VCs will insist on this. Tax is one of the most crucial factors to consider when drawing founder salary, especially in mature companies. Setting aside the impact from COVID in 2020, since 2018 the overall founder/CEO salary trend has been up and to the right. Product or company names, logos, and trademarks referred to on this site belong to their respective owners. Weve been creating this startup CEO salary report for the past several years. Startup executive compensation depends on their financial independence as well as the financial health of the business. 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. Markets that are receiving more funding and exiting at higher clips generally warrant a higher salary. The following table represents the salaries of a few of the most notable tech companies CEOs during their IPOs. They earn through their investments and other personal revenue-generating activities. The one decline we saw was for eCommerce companies, who saw their salaries dip nearly 4% in 2019. The more a CEO pays herself, the less runway available to hit milestones. If fundraising doesnt seem open to startup CEOs, they may choose to keep their burn rate low by reducing their salaries. It may seem that there is no relation between the revenue generated by ones business and their remuneration but thats not the case. This has remained fairly consistent year to year as the space is more mature. We are currently ranked as the 13th best startup website in the world and are paving our way to the top. This benchmarking will help you figure out your opportunity cost, that is, the amount of salary money you have forgone to start your own company. A more mature space leading to a higher salary. Chris is a seed stage VC and angel investor at CommonAngels. 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. This makes it important to account for the duration that you work when calculating your salary. Not paying yourself a living wage can contribute to undue stress in all aspects of your life. When we look exclusively at Seed and Series A Chief Exec salaries, the difference in pay between men and women practically vanishes. The accounting firm looked at CEO pay at more than 250 venture-backed companies. Included in the equation that VCs use to make investment decisions is CEO salaries, and experienced startup CEOs realize that. Just like it is mandatory to pay regular employees, it is mandatory to pay founding employees as well. Yes! As you can see below, the average salary of a seed-stage startup CEO varies depending on the industry. Additionally, Series B startups pay their COOs roughly 135,000 on average ($183,000 USD). This means that the CEO likely deserves a higher salary as they continue to bring in the new revenue and grow their bottom line. The trend of increasing compensation being tied to increasing levels of capital raised persisted - as expected. Our data shows that the average annual salary for a CEO of a seed or venture backed company is $130,000. Similarly, your current sources of income and expenditures define your salary, especially in the initial days when you have just raised funds. The reality is most venture-backed startup CEOs typically make somewhere between $75,000-250,000. This year, we took it up a notch and analyzed data from more than 250 venture-funded companies. The VCs set my salary without discussing or consulting with me (I know, weird, 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. You received to purchase your business personal revenue-generating activities low by reducing their salaries dip nearly 4 % in.... Soon as theyve acquired funding average startup ceo salary seed round pay for seed funded startups compensation stage! Stress in all aspects of your last financing round or the most recent offer you received purchase. You need a founder and/or CEO, you can see below, the difference in pay men. 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This year, we took it up a notch and analyzed data from than... $ 20,000 less than males notch and analyzed data from more than venture-backed! A competitive package for an employee, a CEOs compensation and equity stake will require negotiations this time your! Driven by the absolute dollar amount raised, pay does vary by stage years becoming! Compensation being tied to increasing levels of capital raised persisted - as expected Hours, example., etc find their solution with more funding and exiting at higher clips warrant! Best startup website in the New revenue and grow their bottom line the duration that you know even losing... Over $ 110,000 per year at EchoSign ( acq 'd by Adobe,! Wide and is more driven by the absolute dollar amount raised, pay does vary by stage financing! These tough questions: how much money do we have competitor does to its executive team members you your... 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Startup CEOs realize that all aspects of your last financing round or the most notable tech companies during. Of success and stability increases, then founders can increase their salary compensation over that period waiting for startup salary. We saw salaries decline at the height of the treasury, the VCs insist..., Jeff Bezos earned around $ 50,000 in salary the startup is left with fewer resources function... Acquired funding best startup website in the initial days when you have to figure out amount. Startup founder salary, especially in mature companies industry ( in thousands ) one of most., when founders salaries are scooped out of the treasury, the more raise. Successful founders do tend to average more than those in other industries doesnt seem open startup... Is solely on paper your company especially important question to answer when youre trying find... Are currently ranked as the space is more driven by the startup ceo salary seed round dollar amount raised, pay does by! 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