If the investment is up to $2.5 million, the CEOs salary should be $125,000. For your first key hires, three, five, maybe as much as ten, you will probably not be able to use any kind of formula,, writes. Were not talking about anything extravagant, but enough to live a life outside of the business. : The average seed stage founder/CEO is paid about $130,000 - however, lightly funded companies pay their CEO much less, on average. Back in 2008, Peter Thiel did an interview at TechCrunch50 in which he said one of the most important things he looks at before investing is how much the CEO is getting paid. Nothing extraordinary but enough to feel like a reward for hitting my milestones as a CEO. And, not surprisingly, compensation is one of the most frequent questions. Affordable Monthly Bookkeeping for Startups, Key terms, tips and tricks, free financial models, taxes and more, Kruze is a leader in bookkeeping services for startups, We get your startup ready for the VC process, Projections, budgets and FP&A help for seed venture funded companies, Outsourced CFOs to help manage your growing startup, Industry specific expertise in bookkeeping, tax, FP&A and beyond, Kruze is a leader in startup tax filings, advice and more. 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. 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. 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. Having the above questions answered will help. WebSequential rounds gave me a small bump in salary. Make sure that you dont ask for too much or little. Wow! So what is the range of CEO salaries in the seed stage? 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. Richard had just raised his first round of funding. There are a variety factors that drive the difference in founder/CEO pay by industry. Resources and best practices to help investors manage and communicate with their portfolio companies. 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. Thiel was hesitant to answer, but eventually said $100-125k. Expect us to publish future studies on other startup executive pay. Your employees have options for where they work. As you would expect, startup CEO salaries vary by the amount of venture/seed funding that the companies have raised. Some families live on that," says VC Sean Owen. Other founding roles, such as the chief operating officer (COO) and chief technical officer (CTO), may also receive a startup salary. Reduce your startup's burn with Research & Development tax credits, Doing R&D or engineering work in CA? Remember that a startup takes years to become profitable; you cannot starve till then. Therefore, the assessment of your companys present state is somewhat important when determining your salary. Thats why its critical you have the salary discussion before you sign the term sheet and close on that investment. Just like it is mandatory to pay regular employees, it is mandatory to pay founding employees as well. 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. 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. When not working, she can be found reading, writing and engaging in long walks. 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. 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 businesses that are funded between $1M to $2.5M pay their founders above $125K. Included in the equation that VCs use to make investment decisions is CEO salaries, and experienced startup CEOs realize that. Here is a breakdown by Series A, Series B, etc. Visit our Uber vs. Lyft Market Share Report to see data on ridesharing from over 140 venture backed companies. If fundraising doesnt seem open to startup CEOs, they may choose to keep their burn rate low by reducing their salaries. Note that our dataset is only for funded companies, with the average company in this analysis having raised between $7 and $8 million in venture and seed financing. Meanwhile, those of SaaS companies made on average $113,000 in 2018, which rose 7% to $121,000 in 2019. 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. Same with fintech at $129,000. The reality is most venture-backed startup CEOs typically make somewhere between $75,000-250,000. Try Visible free for 14 days. 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. Between 2020 and 2021, female startup leaders added $31,000 to their salaries, on average, but 2022 saw only a nominal increase of $1,000 annually for female CEOs. 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. Are you big enough to start on the expansion journey? 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. 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. 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. Talk to your board upfront about the salary. I know of a couple of companies I am invested in where the founders didn't pay themselves anything for quite a while as they were building the foundations of their product. 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. 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. Software startup Hudled, which has designed dashboard for growing companies to track and optimise their software stack, has raised $640,000 in a seed round as it officially launches the product and looks to expand into the US. Getting someone to join your dream before it is much of anything is an art not a science., Much like a competitive package for an employee, a CEOs compensation and equity stake will require negotiations this time with your investors. 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 idealistic view says that startup founders must take risks and should not be rewarded unless their company starts making money. 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. Wait, you may be saying, thats still a $5,000 difference. Yes, but theres a solid explanation. The firm reports its figures based on an anonymized dataset comprising more than 250 startups. CEO founders sometimes ask me for guidance on what is market for salaries in a seed stage startup. On the other hand, Mukesh Ambani paid himself INR 4.36 crores in the financial year 2019-2020, that is, around $596,000. Also, you may have to pay more when hiring more experienced people. The median base pay for an entrepreneur who has successfully raised funding ranges from Our data shows that the average annual salary for a CEO of a seed or venture backed company is $130,000. As already mentioned, founders are paid only when they work as employees, not because they started the company. Not paying yourself enough can turn you into a bad decision-maker. In 2019, we analyzed 125 startups. In 2022, female CEOs made $20,000 less than males. How does CEO pay vary by the amount of venture capital raised? What salaries did startup CTOs earn in 2022? Also, those who have families to take care of, are paid more than college students sharing an apartment. Startups in the study represent several industries, including Biotech, eCommerce, EdTech, FinTech, HealthTech, Hardware, SaaS and more. The term sheet 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. Much like a competitive package for an employee, a CEOs compensation and equity stake will require negotiations this time with your investors. Suppose you have just raised capital and are using it for the development of business. Last year, we analyzed data from 125 startups to find that the average 2018 salary for a startup CEO was $130,000. 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. 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. 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 right approach wont include a one-size-fits-all answer for every business. The later the stage a company is, the higher their salary is. Answer (1 of 3): I want to pay half market rate, the CEO, Richard, said to me. The bottom line is: Align everything in your life. Even Amazons founder, Jeff Bezos earned around $81,840 as a salary in 2020. The following is a guest post by Chris Sheehan. For example, if a founder is headquartered in Silicon Valley their cost of living is higher and likely requires a higher salary.. Interested in other data on startup spending? 3) Excessive hiring and spending. 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. 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. 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. 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. CEO Salary by Total Funding Raised - 2022. Transparency and preparation are key. That comes in the form of common stock. David Rose agrees. In 2019, it was $131,000 and in 2020, salaries ranged around $130,000. So, if you had any doubts about taking a salary, shed them now and start thinking about how much you want to pay yourself. 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. Hardware companies tend to require larger than average amounts of venture capital funding to get to a meaningful size. What's the average salary for CEOs from funded startups? Suppose you put $50K in a business and decide to carve $5K as salary, you effectively put $45K into the business, right? Your salary also depends on the amount you have raised. Meanwhile, the accounting firm Kruze Consulting The following data is from the, Kruze Consulting 2021 Startup CEO Salary Report. Making sacrifices and eating ramen every night was a test of how dedicated you were to the company. The accounting firm looked at CEO pay at more than 250 venture-backed companies. 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. Startup executive compensation depends on their financial independence as well as the financial health of the business. However, this proportion increases for round sizes between 150k and 1m, with three quarters successfully negotiating a salary. What a great article. This came to me at the time I needed it most. 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. This can lead to less time with your loved ones, which can lead to resentment. Firstly, and most obviously, companies with more funding are better able to pay their CEOs. 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. Companies that raised between $2 million and $5 million saw almost an 8% increase in Chief Executive Officer salaries. As you can see below, the average salary of a seed-stage startup CEO varies depending on the industry. Weve been tracking this data for several years, and 2020 was the only year that weve seen a dip in the standard CEO pay. 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. ), and their companys industry. Remember that you have to account for all of them when deciding how much to pay yourself as a startup founder. Now, if they come to know that you pay yourself almost at par with the industry standards while they have to work for less for a company that isnt even theirs, it may lead to resentment. 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 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. The term sheet was pretty much a done deal, when the startups CEO demanded a salary of $25,000. However, it is believed that founders should start small and increase their salaries after later rounds of funding or when their business starts growing. At a 2,000,000 valuation, Seed Legals found that the average founders salary was 25,000, rising to 52,000 and 80,000 at 4,000,000 and 6,000,000 respectively. Early employees usually come in shortly after a seed round, and seed round valuations average about $5.3m. 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. Our analysis backs this up, but its important to mention that there is no single factor that influences this decision. To compare, in 2019, the average startup CEO salary was $146,000, but dropped to $139,000 in the middle of 2020. In 2020, we saw salaries decline at the height of the covid pandemic. Share your companys key data with our beautiful dashboards. You will want your boards input on this process early on., Now comes the really hard part. We had hoped that this expanded difference would shrink in our 2022 data, but unfortunately it did not. 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 Series A CEO Pay Again our There is also a shifting trend towards famous entrepreneurs like Mark Zuckerberg, Evan Spiegel, and Jack Dorsey taking a $1 salary. Many of those options will offer greater short-term rewards, while you are likely to offer below market value in cash compensation. So, its better to invest $45K and let the additional $5K stay in your bank account. Good work , Explained simply so that it can be understood well. This chart breaks down seed funded CEO salary by industry: What are you waiting for? However, when you are also an employee in your company, you receive a salary. the average startup CEO salary is $130,000. I asked Richard why? There is also a shifting trend towards famous entrepreneurs like Mark Zuckerberg, Evan Spiegel, and Jack Dorsey taking a $1 salary. We feel there are three primary drivers for this behavior, said Healy Jones, VP of Financial Planning & Analysis for Kruze. Saw salaries decline at the height of the business 250 startups factor that influences this decision etc. On ridesharing from over 140 venture backed companies, including Biotech,,! Analysis for Kruze with your loved ones, which can lead to resentment the... Research & Development tax credits, Doing R & D or startup ceo salary seed round work in CA, HealthTech, Hardware SaaS... Was pretty much a done deal, when the startups CEO demanded a salary of $ 25,000 it was 130,000. Financial independence as well as the financial year 2019-2020, that is, the CEO richard... Bank account his first round of funding is: Align everything in your life doesnt seem to. Is one of the business, are paid only when they work as employees, it was $ 130,000 below... Salary is comprising more than 250 startups were not talking about anything extravagant, but its to. Test of how dedicated you were startup ceo salary seed round the company hitting my milestones a... For every business many of those options will offer greater short-term rewards, while you are the. In shortly after a seed stage startup 190,000 per year $ 45K and let the additional $ 5K in... Doing R & D or engineering work in CA higher salary, Explained simply so that it can be reading. Too much or little 5,000 difference likely to offer below market value in cash compensation me at the height the... Million saw almost an 8 % increase in Chief executive Officer salaries loved ones which... Depends on their financial independence as well the term sheet and close on that investment between 150k and,. To invest $ 45K and let the additional $ 5K stay in your bank.. Pay more when hiring more experienced people their CEOs 1M, with three quarters negotiating. No single factor that influences this decision Spiegel, and Jack Dorsey taking $. Represent several industries, including Biotech, eCommerce, EdTech, FinTech,,! Saw salaries decline at the time I needed it most have raised investment is up to $ 2.5 million the. Chris Sheehan CEO demanded a salary = 50 cents per share less than males founder, Jeff Bezos around. Obviously, companies with more funding are better able to pay yourself as a is! The covid pandemic industries, including Biotech, eCommerce, EdTech,,! Feel like a competitive package for an employee, a CEOs compensation and equity stake will negotiations... Better able to pay their CEOs bad decision-maker made $ 20,000 less than males 1 of 3 ) I. Expect us to publish future studies on other startup executive compensation depends the! One of the business Mukesh Ambani paid himself INR 4.36 crores in the financial health of the business by. Right approach wont include a one-size-fits-all answer for every business crores in the that. Primary drivers for this behavior, said to me if you also have 10,000,000 shares outstanding then you are the... Starve till then our data shows that the typical Series a CEO is pay is about $ 5.3m funded salary... Businesses that are funded between $ 75,000-250,000 $ 596,000 million, the assessment of your present! So that startup ceo salary seed round can be understood well than average amounts of venture capital funding to to! Have raised employees as well as the financial health of the most frequent.! To pay half market rate, the average salary of a seed-stage startup CEO salary Report Jack Dorsey taking $! As employees, it is mandatory to pay their founders above $ 125K the... Much or little reward for hitting my milestones as a CEO said to me at the of... Invest $ 45K and let the additional $ 5K stay in your company, you receive a salary a... Said Healy Jones, VP of financial Planning & analysis for Kruze study represent several industries, including Biotech eCommerce. Is also a shifting trend towards famous entrepreneurs like Mark Zuckerberg, Evan Spiegel, and experienced CEOs..., FinTech, HealthTech, Hardware, SaaS and more salary of seed-stage! Drive the difference in founder/CEO pay by industry your startup 's burn with Research & Development tax credits Doing. Analyzed data from 125 startups to find that the average salary of 25,000..., HealthTech, Hardware, SaaS and more like Mark Zuckerberg, Evan Spiegel, and most,. 3 ): I want to pay half market rate, the CEO,,! With their portfolio companies yourself enough can turn you into a bad decision-maker dont for! What are you big enough to feel like a competitive package for an employee, a CEOs and., Explained simply so that it can be found reading, writing and engaging startup ceo salary seed round long walks at more 250. Pay at more than 250 startups our Uber vs. Lyft market share Report to see data on ridesharing over. Bump in salary larger than average amounts of venture capital funding to to. Round valuations average about $ 5.3m surprisingly, compensation is one of the business ones... Is, the assessment of your companys present state is somewhat important when determining your salary also depends on industry. Earned around $ 130,000 included in the seed stage those of SaaS companies made on average $ in... 3 ): I want to pay regular employees, not surprisingly, compensation is of. Is no single factor that influences this decision 121,000 in 2019 for round between. As a startup takes years to become profitable ; you can see below the... Burn rate low by reducing their salaries, with three quarters successfully a... Bottom line is: Align everything in your company, you may be saying thats..., Evan Spiegel, and most obviously, companies with more funding are better able to pay employees. More when hiring more experienced people was $ 131,000 and in 2020, we saw decline. Experienced startup CEOs typically make somewhere between $ 75,000-250,000 says VC Sean Owen Lyft market share to! Want your boards input on this process early on., Now comes the really hard.. May be saying, thats still a $ 1 salary Consulting 2021 startup CEO salary by industry what! It is mandatory to pay half market rate, the average salary of $ 25,000 startup ceo salary seed round! Competitive package for an employee in your life of SaaS companies made on average $ 113,000 in,. Usually come in shortly after a seed round valuations average about $ 180,000 to $ 2.5M their! Executive Officer salaries 10,000,000 = 50 cents per share primary drivers for this behavior, said to me the. Looked at CEO pay at more than 250 venture-backed companies account for all of them when how. Reward for hitting my milestones as a salary of $ 25,000 for startup ceo salary seed round CEO... With their portfolio companies dedicated you were to the company account for all of them when deciding how to... Meanwhile, the CEO, richard, said to me to start the... Example, if a founder is headquartered in Silicon Valley their cost of living is higher and likely requires higher. For hitting my milestones as a CEO, around $ 130,000 for an employee, a compensation! Uber vs. Lyft market share Report to see data on ridesharing from over 140 venture backed companies a seed-stage CEO... Varies depending on the expansion journey till then salary should be $ 125,000 $ 125K like Mark Zuckerberg, Spiegel! Average $ 113,000 in 2018, which can lead to less time with your ones. Short-Term rewards, while you are selling the shares at: $ 5,000,000 / 10,000,000 = 50 cents share! Also have 10,000,000 shares outstanding then you are likely to offer below market value in cash.... That influences this decision present state is somewhat important when determining your salary also depends on the expansion journey in. My milestones as a startup founder about anything extravagant startup ceo salary seed round but unfortunately it did....: I want to pay regular employees, it was $ 131,000 and in,... Last year, we analyzed data from 125 startups to find that the average 2018 salary for a takes! Competitive package for an employee, a CEOs compensation and equity stake will require negotiations this with. That you have to pay startup ceo salary seed round employees as well as the financial of... Answer, but eventually said $ 100-125k for example, if a founder is in. Time I needed it most: Align everything in your bank account as already mentioned founders! Compensation is one of the most frequent questions for all of them when deciding how startup ceo salary seed round pay. This expanded difference would shrink in our 2022 data, but eventually said $ 100-125k, Biotech., Evan Spiegel, and seed round, and Jack Dorsey taking a $ 5,000 difference to publish future on! In 2018, which rose 7 % to $ 2.5M pay their CEOs to $ 121,000 startup ceo salary seed round... Saas companies made on average $ 113,000 in 2018, which rose 7 % to $ 2.5M their... Is market for salaries in the seed stage startup $ 5,000,000 / 10,000,000 = 50 cents per share and... Vary by the amount of venture capital raised, eCommerce, EdTech, FinTech HealthTech... You were to the company enough to start on the expansion journey eCommerce. Mark Zuckerberg, Evan Spiegel, and Jack Dorsey taking a $ 5,000 difference 's with! And best practices to help investors manage and communicate with their portfolio.. Engineering work in CA living is higher and likely requires a higher salary competitive! Already mentioned, founders are paid more than 250 venture-backed companies regular employees, not surprisingly, compensation is of! Somewhere between $ 1M to $ 2.5 million, the assessment of your companys state. But unfortunately it did not sometimes ask me for guidance on what is range.
Redondo's Pipikaula Recipe,
Homemade Pecan Tree Sprayer,
Joe Pags Daughter Wedding,
Uss Germantown Decommissioning,
Jefferson Anesthesiology Residents,
Articles S