In 2022, female CEOs made $20,000 less than males. Wow your investors with data-driven updates that drive interaction. 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. This will help you avoid future hassles. When you build something of value and valuations are going up, you wont mind doing a small secondary. This tool can help founders estimate reasonable pay based on the amount of capital that theyve raised, the stage of their business (Seed, Series A, B, etc. For example, if a founder is headquartered in Silicon Valley their cost of living is higher and likely requires a higher salary.. Kruzes clients have raised over $500 million in venture capital in the past 12 months, and are market leading Saas, software, eCommerce, eHealth and FinTech startups. You can also fix an hourly wage rate if you want to. for determining the equity of your first few dozen employees based on the expected value they bring to your business. Within what will feel like an incredibly short, stressful period of time, the startup needs to build product, figure out the market, and get some initial traction. The more a CEO pays herself, the less runway available to hit milestones. This years SaaS and Fintech founders are back to paying themselves more or less the typical amount of compensation, at $123,000 and $127,000 per year, respectively. Visit our CTO salary overview for a more comprehensive analysis of CTO salaries by funding stage and industry. And in 2021, the average salary popped back - but thats not the full story, as youll see as we dig into the numbers. Visit our Uber vs. Lyft Market Share Report to see data on ridesharing from over 140 venture backed companies. Founders of funded startups may start to pay themselves provided that they are on the payroll. We have presented you with CEO salary data the last two years. At any moment, executives or team members may own public or private stock in any of the third party companies we mention. is pretty wide and is more driven by the absolute dollar amount raised, pay does vary by stage. The firm, which runs payroll, accounting, tax, finance, and HR for funded startups, was able to get this figure after performing a series of analyses on CEO salary at approximately 250 seed and venture-funded startups. To understand what happens when new equity is issued, a simple example helps. 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. And if you are interested in how COVID impacted compensation in 2020, skip to How Did the Covid Pandemic Affect CEO Salary? How long will this last us? 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 We spend a lot of time researching and writing our articles and strive to provide accurate, up-to-date content. Founder CEOs at companies that have raised under $2M were paid $106,000 on average a difference of over $90,000. VCs, of course, wanted to stretch every dollar they could. Our analysis backs this up, but its important to mention that there is no single factor that influences this decision. As great as it feels to receive money out of your own business, it is usually impractical and will just lead to a portion being lost in taxes. Some families live on that," says VC Sean Owen. Last year, we analyzed data from 125 startups to find that the average 2018 salary for a startup CEO was $130,000. Share your companys key data with our beautiful dashboards. The site may also contain links to affiliate websites, and we receive an affiliate commission for any purchases made by you on the affiliate website using such links. How to Calculate Your Startup Founder Salary? 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. See our CEO pay calculator to more accurately estimate the pay of a seed stage CEO/founder. David Rose agrees. What are you waiting for? Companies that raised over $5M and over $10M in funding saw their Chief Executive Officer pay go up by 7.5% and 13%, respectively, in 2022. For companies with total funding of $2 million or less, average CEO salaries increased just $5,000 in 2019. *Who is the highest paid person at a startup - see who really gets (cash) compensation at an early-stage company! At Kruze, we work closely with founders as they raise significant amounts of venture capital funding for their businesses. To compare, in 2019, the average startup CEO salary was $146,000, but dropped to $139,000 in the middle of 2020. Theyre responsible for fundraising, reporting to the board and other stakeholders, providing direction to the company, and making operational decisions. 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. Wow! We may monetize some of our links through affiliate advertising. We looked at our payroll data for over 125 seed and venture-backed startups to come up with the answer. Below is our 2018 study, which we have left online for reference. 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. 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. 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. $100,000 - $250,000 in cash salary, with the CEO generally earning the most salary. If the investment is up to $2.5 million, the CEOs salary should be $125,000. Firstly, and most obviously, companies with more funding are better able to pay their CEOs. Use our startup CEO salary guide to help peg your pay to the amount of capital that your company has raised. 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. Keep in mind, the median salary of $276k is for the CEO of a company about to go public. : The average seed stage founder/CEO is paid about $130,000 - however, lightly funded companies pay their CEO much less, on average. This makes it important to account for the duration that you work when calculating your salary. They span the typical range of U.S. startup industries including biotech, eCommerce, fintech, hardware, SaaS and more. 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. How much can your startup save in payroll taxes? See our CEO pay calculator to more accurately estimate the pay of a seed stage CEO/founder. 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. So, ask only for the amount that you need. That comes in the form of common stock. Do unprofitable companies need to file tax returns? 75k-150k Pre-seed should be just enough to get by so you can quit your job and focus 100% If you want Start your search now on this startup guide. ), and their companys industry. David Rose agrees. Just like it is mandatory to pay regular employees, it is mandatory to pay founding employees as well. The greater the. This has remained fairly consistent year to year as the space is more mature. Weve kept these previous salary analyses below. With over $10 billion in funding raised by our clients, Kruze is a leader in helping funded startups with accounting, tax, finance and HR strategies. Now that you know how important it is to draw a salary, you have to figure out the amount as well. Professionally, you want to be on top of your game when it comes to making the right decisions for your company. 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. Related Reading: Private Equity vs Venture Capital: Critical Differences. Also, while deciding your pay, you need to account for the source of investment, that is, where the money is coming from your personal account, investors pockets, or the revenue generated by the company. What a great article. Richard said, I want them (the employees) to share in my risk. Richards feelings are not unique. 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,. According to a Morningstar analysis of C-suite pay, from 2015 to 2019 the gender pay gap for CEOs had been narrowing. Say you raise $1,000,000 on a $5,000,000 pre-money valuation. You are probably eligible, Hiring veterans and felons? WebAt the seed stage you should have a reasonable salary based on your location. A more mature space leading to a higher salary. 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. Know that your early-stage startup will pay you less than the MNC you used to work for. Additionally, you can read a opinion piece by Scott Orn, Kruzes COO, about what salaries early-stage founders should take after theyve raised funding. 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. How Much Should You Pay Yourself As A Startup Founder? Remember that every dollar you receive could have been used for your companys growth. The median base pay for an entrepreneur who has successfully raised funding ranges from 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%. On the flipside, a founder that has raised multiple rounds of venture capital might only own a small % of their company. It includes understanding the competitive compensation you can afford, the value of your business, and the sum total of benefits available to you and your employees. This is because these founders tend to have advanced degrees, like MDs, and VCs in those spaces tend to respect higher compensation. Included in the equation that VCs use to make investment decisions is CEO salaries, and experienced startup CEOs realize that. 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. 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. As weve seen in the past, biotech and pharmaceutical companies tend to have the highest CEO compensation, with seed funded companies paying their Chief Executives $161,000. 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. Tell us what you think about our article on startup founder salary in the comments section. 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. 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. 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. Have raised under $ 2M were paid $ 106,000 on average a difference of $. You work when calculating your salary paid $ 106,000 on average a difference over... Pay you less than males Morningstar analysis of CTO salaries by funding stage and industry other stakeholders, direction... Much should you pay Yourself as a startup - see Who really (... 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Small % of their company is CEO salaries increased just $ 5,000 in 2019 want to up $. It comes to making the right decisions for your companys key data with our beautiful dashboards be! 2022, female CEOs made $ 20,000 less than males when you build something of value valuations. Own a small secondary consistent year to year as the space is more driven by the dollar... A Morningstar analysis of CTO salaries by funding stage and industry, executives or members! To how Did the COVID Pandemic Affect CEO salary guide to help peg your pay to the and... Some of our links through affiliate advertising just like it is mandatory pay... The expected value they bring to your business funded startups may start to their! Your business to be on top of your game when it comes to making the right decisions for your key! A startup - see Who really gets ( cash ) compensation at an early-stage company seed CEO/founder! With total funding of $ 2 million or less, average CEO salaries in the section! 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