Even Amazons founder, Jeff Bezos earned around $81,840 as a salary in 2020. On, Stating the obvious, salary needs can vary widely. 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,. 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. 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. Capital gains is what you should strive for and this will happen only if you invest enough time and resources in the company. 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. According to Kruzes data, after completing their research, the average CEOs get roughly 146,000 dollars as a salary. It discovered the salaries are up 2.7% compared to 2021 well below the The salary amount, frequency, and the way you withdraw that money affect your tax amount. Decide how much of their total compensation you would like to pay in cash (AKA their salary). It is 50-hours workweeks, endless sacrifices, and years of little or no income from a business that demands numerous resources. 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. 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. Startup CEOs pay varies by industry and the amount of venture capital funding the company has raised, with companies that are more highly funded earning a higher salary. 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 more investment a startup attracts, the more its funder can afford. 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. Some observations: So what is the range of CEO salaries in the seed stage? Another influencing factor is how long the company has bootstrapped prior to the seed round and how much were the founders getting paid during this time. 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. It [a low salary] aligns interest with the equity holders. Secondly, the increased CEO salaries recognizes that these CEOs are more effective at fundraising, much like how compensation increases for CEOs in mature companies that generate greater profits., Finally, startup culture can generate pressure to not take salaries, Jones said. The accounting firm looked at CEO pay at more than 250 venture-backed companies. Thanks for the article. 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. The firm reports its figures based on an anonymized dataset comprising more than 250 startups. We have created one of the most complete databases in the startup world. Expect us to publish future studies on other startup executive pay. Its unclear exactly how you should amortize this value, but this method again gives you a value in the low 5 figures. An interesting perspective. However, do remember that your startup wont give you as much as a mature competitor does to its executive team members. Build relationships, manage a fundraise and build your business. Market value for equity is dynamic though and the necessary points to attract an individual employee can vary. The average CEO pay for seed funded startups is $119,000 - but it does vary by industry. Startup Lessons From The MIT and Harvard Strategy War Game, Recently, I led a team from MIT in the second annual strategy war game with Harvard Business School organized by Fuld and Company. On the other hand, Mukesh Ambani paid himself INR 4.36 crores in the financial year 2019-2020, that is, around $596,000. Our data shows that the average annual salary for a CEO of a seed or venture backed company is $130,000. Startup accounting firm Kruze Consulting just updated its annual CEO salary reportand has some interesting insights to go with it. 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. 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. 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%. Professionally, you want to be on top of your game when it comes to making the right decisions for your company. However, our research is meant to aid your own, and we are not acting as licensed professionals. So, ask only for the amount that you need. 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. Industries and different verticals can lead to varying salaries. Thats why its critical you have the salary discussion before you sign the term sheet and close on that investment. Kruze provides Startup CFO Consulting to over 500+ startups in Silicon Valley, Los Angeles, New York, and other major startup hubs. What are Your VCs Return Expectations Depending on the Stage of Investment? Having the above questions answered will help. 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. Kruze Consulting was founded in 2012 by Vanessa Kruze, a big four alum, startup controller and CPA. The following steps will give you a broad idea of how to go about it. 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. It discovered the salaries are up 2.7% compared to 2021 well below the national inflation rate. CEO salaries in the Biotech and Healthcare industries tend to average more than those in other industries. 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. What are you waiting for? For 2022, the average startup CEO salary increased by 2.7% from 2021 levels to $150,000, while the median increased to $140,000. Say you raise $1,000,000 on a $5,000,000 pre-money valuation. 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. A finance enthusiast, literature beau and lifelong learner. The CEO's salary sets a cap for everyone else. Thats why we see that even the founders who forgo salaries also pay themselves a $1 amount. Thiel was hesitant to answer, but eventually said $100-125k. It discovered the salaries are up 2.7% compared to 2021 well below the national inflation rate. Very few entrepreneurs have the courage to be that transparent. Here is a breakdown by Series A, Series B, etc. 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. If fundraising doesnt seem open to startup CEOs, they may choose to keep their burn rate low by reducing their salaries. When you build something of value and valuations are going up, you wont mind doing a small secondary. is pretty wide and is more driven by the absolute dollar amount raised, pay does vary by stage. 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. Wow! When should a startup make its first ops hire? 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. This will help you avoid future hassles. We looked at our payroll data for over 125 seed and venture-backed startups to come up with the answer. 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. According 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. How do you Determine Proper Compensation for Startup CEOs and However, we were surprised that healthcare companies had lower founder/CEO pay. "In my experience, that fact pattern (a pair of founders, $500K seed round) would typically see The average salary increase in early-stage company CEOs follows general business trends according to The Conference Board, a non-profit research organization, salaries in general are projected to increase by 3.9% in 2022. Last year, we analyzed data from 125 startups to find that the average 2018 salary for a startup CEO was $130,000. This can lead to less time with your loved ones, which can lead to resentment. How to Calculate Your Startup Founder Salary? The other major surprise we noticed was that eCommerce companies are paying their CEOs much more than they had in the past $141,000 for 2022. To help answer that question, we analyzed CEO pay at over 250 seed and venture-funded startups. According to our founder and CEO of Kruze Consulting, Vanessa Kruze, this years data indicates that startup CEOs are making around 10% more than last year, which is to be expected since funding rounds increased in size year over year.. Market value for equity is dynamic though and the necessary points to attract an individual employee can vary. They might lose faith in you and your company. However, when you are also an employee in your company, you receive a salary. 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 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. The median base pay for an entrepreneur who has successfully raised funding ranges from Also, make sure that you consider all the factors mentioned above before deciding on your salary. : The average seed stage founder/CEO is paid about $130,000 - however, lightly funded companies pay their CEO much less, on average. 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. Not only does a fair market salary reduce your financial stress, it gives you a safety hatch. The accounting firm looked at CEO pay at more than 250 venture-backed companies. *Who is the highest paid person at a startup - see who really gets (cash) compensation at an early-stage company! 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. Reduce your startup's burn with Research & Development tax credits, Doing R&D or engineering work in CA? Every stakeholder of the startup often needs direct contact with the CEO, and startup CEOs cant delegate everything. Do unprofitable companies need to file tax returns? If it is set at a high level, you end up burning a whole lot more money. In 2020, we saw salaries decline at the height of the covid pandemic. For example, if a founder is headquartered in Silicon Valley their cost of living is higher and likely requires a higher salary.. Even giants like Google and Amazon took years before becoming profitable and even then, their founding workers take salaries. Startup executive compensation depends on their financial independence as well as the financial health of the business. Photo: Supplied. 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. Salaries at the upper end of the range ($150k) are correlated with larger seed rounds of around $1.5 million. As most CEOs and founders know, launching a startup means working long hours, dedicating time and thought to the business success. Suppose you put $50K in a business and decide to carve $5K as salary, you effectively put $45K into the business, right? Per month. Thankfully, that thinking has evolved. As your company grows, and the chances of success and stability increases, then founders can increase their salary compensation over that period. 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. Go through the table and assess the relation between a founding executive team members salary and their companys cash flows. CEO pay varies by a number of 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. Startup compensation guide: see thousands of startup salary and equity data points. Founders are paid only when they work as employees. Non-co-founder COOs at seed-stage startups earn an average salary of 94,500 ($128,000 USD as of writing). Was trying to find an answer to this since a few months and here it was so smoothly explained!!! It discovered the salaries are up 2.7 % compared to 2021 well below the national inflation.. Some interesting insights to go with it an average salary of 94,500 $. 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