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List down all your sources of income and expenditure; dont forget to consider loans and taxes. As we found last year, the highest-paid CEOs fell predominantly into the healthcare and biotech categories. Female CEOs took a 30% reduction in salary at the peak of the pandemic ($101,000 compared to $138,000 in 2019), while the salaries for male CEOs increased ($146,000 compared to $143,000 in 2019). Below is our 2019 study, which we have left online for reference. 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. This year, we took it up a notch and analyzed data from more than 250 venture-funded companies. How does a cash package for X employees change this? We are strong advocates for CEOs and founders paying themselves a fair market salary. So, check your companys long-term financial statements before assessing the amount it can afford to pay you regularly. Your employees have options for where they work. 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. Thiel was hesitant to answer, but eventually said $100-125k. CEO pay varies by a number of CEOs at companies that have not recently raised capital have been known to dramatically reduce their salaries in order to preserve cash, and our analysis supports that. According to a Morningstar analysis of C-suite pay, from 2015 to 2019 the gender pay gap for CEOs had been narrowing. 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. 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. 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. E-commerce founders saw a significant increase over last year, with an average salary of $141,000 presumably because the sector has seen a great run of successful results, partially due to a downtick in the retail sector and a customer focus toward buying online. As financial and accounting consultants to hundreds of funded startups, we are regularly asked by our clients to help them benchmark their companies metrics. 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 chart breaks down seed funded CEO salary by industry: The analysis comes from an anonymized dataset comprising more than 250 venture-funded companies and representing more than $2 BN in funding. Remember that a startup takes years to become profitable; you cannot starve till then. Interestingly, Female CEOs were more likely to take a pay cut during the pandemic. 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. The following chart shows what happened to the CEOs who reduced their pay during COVID by the end of the year. Still, when it comes to startup CEO pay, our data reveals some good news. Finally, startup culture can generate pressure to not take salaries. Some families live on that," says VC Sean Owen. Someone that has funded their own company and taken no outside financing might own 100% of the company. At any moment, executives or team members may own public or private stock in any of the third party companies we mention. Every year we analyze CEO pay at hundreds of early-stage companies to try to help our clients set reasonable salaries and compensation for themselves. In 2019, it was $131,000 and in 2020, salaries ranged around $130,000. Female startup CEOs continue to lag behind their male counterparts in salary in 2022. A more mature space leading to a higher salary. Assess the state of your startup and its finances. However, as the year ended and many technology companies recovered - and as venture funding continued at unprecedented levels - boards and executives felt comfortable increasing executive compensation to pre-crisis levels., Compared to Their Male Counterparts, Female CEOs Took a Pay Cut During the Pandemic. Kruze Consulting expanded its salary research in 2022 to include the average salaries paid to Chief Technology Officers (CTOs). Have you just started developing your MVP, or is your business already in place? Our data shows that the average annual salary for a CEO of a seed or venture backed company is $130,000. Calculate your budget by accounting for all your sources of income and expenditure. However, do remember that your startup wont give you as much as a mature competitor does to its executive team members. How to Rebalance Ownership Between Founders, Kruze is a leader in accounting services for startups. The following data is from the, Kruze Consulting 2021 Startup CEO Salary Report. Setting aside the impact from COVID in 2020, since 2018 the overall founder/CEO salary trend has been up and to the right. 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. Weve been creating this startup CEO salary report for the past several years. You are probably eligible, Hiring veterans and felons? For 2022, the average startup CEO salary increased by 2.7% from 2021 levels to $150,000, while the median increased to $140,000. 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 average seed stage founder/CEO is paid about $130,000 - however, lightly funded companies pay their CEO much less, on average. $276k Is the Median Startup CEO Salary for a Very Successful Company. For first-time founders and leaders of early-stage startups, determining compensation for the CEO and early employees can be tough. You need to assess the current state of your venture properly before determining your salary. Co-founder/CEO at EchoSign (acq'd by Adobe), Upvoted by Oliver Emberton , Founder of Silktide and As you would have figured out by now, entrepreneurs dont always earn big bucks. Kruze Consulting was founded in 2012 by Vanessa Kruze, a big four alum, startup controller and CPA. Founders are paid only when they work as employees. So, its better to invest $45K and let the additional $5K stay in your bank account. 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. Raise capital, update investors and engage your team from a single platform. Know that your early-stage startup will pay you less than the MNC you used to work for. 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. Go through the table and assess the relation between a founding executive team members salary and their companys cash flows. 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. WebAt the seed stage you should have a reasonable salary based on your location. One of the best ways to set a reasonable remuneration amount for yourself is to go by industry standards. As most CEOs and founders know, launching a startup means working long hours, dedicating time and thought to the business success. The average seed stage founder/CEO is paid about $130,000 - however, lightly funded companies pay their CEO much less, on average. Understand that being a founder doesnt entitle you to a higher salary than everyone; growing your business by being a better employee does. 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. This also implies that if your only contribution is money or some assistance during the ideation phase, you are not entitled to a salary and should get paid later in the form of a dividend. In 2019, before COVID, startup CEO salaries averaged $142,000. 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. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Wonderful article Kavvya!! Also, try our Startup CEO Salary Estimator tool on the right. On, Stating the obvious, salary needs can vary widely. Owners of mature companies can pay themselves more than growth-stage startup founders even when both generate good revenue. ), and the companys industry. 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. Do account for tax. Estimate your R&D tax credit using our free calculator. As you would expect, startup CEO salaries vary by the amount of venture/seed funding that the companies have raised. 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). Firstly, and most obviously, companies with more funding are better able to pay their CEOs. 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. The following is a guest post by Chris Sheehan. Transparency and preparation are key. Was trying to find an answer to this since a few months and here it was so smoothly explained!!! Interestingly, this proportion remains consistent above the 150k inflection point, whether the round size is 200k or approaching 1m. This means that the CEO likely deserves a higher salary as they continue to bring in the new revenue and grow their bottom line. Several years ago, many eComm companies were just getting started when they were seed funded. 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,. Your salary also depends on the amount you have raised. The reality is most venture-backed startup CEOs typically make somewhere between $75,000-250,000. At the seed stage you should have a reasonable salary based on your location. We feel there are three primary drivers for this behavior, said Healy Jones, VP of Financial Planning & Analysis for Kruze. When the company exited after three venture rounds, my salary was at $250k. 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. While there are quite a few factors that go into determining your salary we find the following to be most important. We hope this report simplifies your startup CEO pay decision! . We feel there are three primary drivers for this behavior, said Healy Jones, VP of Financial Planning & Analysis for Kruze. There has always been an underlying (unsaid) belief that startup CEOs and founders should have to make personal sacrifices and pour their blood, sweat and tears into their business. The average CEO pay for seed funded startups is $119,000 - but it does vary by industry. The table below shows average and median salaries since 2018. 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. As a founder and/or CEO, you also want to pay yourself enough to get by and prevent money from being an unnecessary distraction. You can also fix an hourly wage rate if you want to. Richard had just raised his first round of funding. As your company grows, and the chances of success and stability increases, then founders can increase their salary compensation over that period. David Rose agrees. 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