startup ceo salary seed round

Just like most couples should discuss important things like money and debt before they are married, its a good idea to talk money and salary before you enter into a marriage with a VC. Did you know even money losing startups can get up to $250,000? Other founding roles, such as the chief operating officer (COO) and chief technical officer (CTO), may also receive a startup salary. Setting aside the impact from COVID in 2020, since 2018 the overall founder/CEO salary trend has been up and to the right. Same with fintech at $129,000. List down all your sources of income and expenditure; dont forget to consider loans and taxes. But [beyond that], it goes to whether the mission of the company is to build something new or just collect paychecks. The table below shows average and median salaries since 2018. Anyway, even when the business starts growing, it wont pay you much in the form of salary. Kruze provides Startup CFO Consulting to over 500+ startups in Silicon Valley, Los Angeles, New York, and other major startup hubs. In 2022, female CEOs made $20,000 less than males. Raise capital, update investors and engage your team from a single platform. Here is a breakdown by Series A, Series B, etc. According to estimates by 80,000 Hours, for example, startup founders in Y Combinator pay themselves around $50,000 in salary. The process is usually difficult for first-time founders, especially because of the complexity of the deciding factors. You may be eligible, CA hardware startups doing R&D can pay less sales tax, Eligibility requirements are challenging for most VC-backed companies, Experts in raising capital and working with VCs, Venture Debt fundraising advice for VC backed startups, Experience helping funded startups navigate the M&A diligence process, High quality 409A's at a discounted price, Kruze's clients raise $1B+ a year in VC funding; this checklist will help you prepare. Good work , Explained simply so that it can be understood well. As your startup starts growing and generating revenue, you may start increasing your salary or decide on bonuses and perquisites for yourself. You need to assess the current state of your venture properly before determining your salary. 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. A finance enthusiast, literature beau and lifelong learner. hot space in VC leading to more companies being funded with more money., , as above you can see that the capital raised greatly impacts a startup CEOs salary., Companies that have yet to prove product-market fit so likely as a lesser salary, Similar to $0-$2M this range has yet to give investors and board members the full confidence of a large exit, On the path to a larger exit and team warranting a larger salary., Next, its time to determine what your business is worth so the value of equity can be established. We used to recommend seed stage founders pay themselves about $119,000, but over the past few years that has increased to about $130,000. Seed, Series A, Series B, etc. Try Visible free for 14 days. So, a high founder salary sets a high baseline for others as well. 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. This means that the CEO likely deserves a higher salary as they continue to bring in the new revenue and grow their bottom line. See our full report for CEO pay bands. 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. 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%. 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. 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. In 2019, it was $131,000 and in 2020, salaries ranged around $130,000. : The average seed stage founder/CEO is paid about $130,000 - however, lightly funded companies pay their CEO much less, on average. We had hoped that this expanded difference would shrink in our 2022 data, but unfortunately it did not. We may monetize some of our links through affiliate advertising. Of course, read our answers to the two logical follow up questions: When can a startup CEO take a raise - well tell you what the data says! Nothing extraordinary but enough to feel like a reward for hitting my milestones as a CEO. Co-founder/CEO at EchoSign (acq'd by Adobe), Upvoted by Oliver Emberton , Founder of Silktide and said Vanessa Kruze, CEO of Kruze Consulting. So, you need to make a fair assessment of your current financial situation before talking to investors about salary. It discovered the salaries are up 2.7% compared to 2021 well below the Even Amazons founder, Jeff Bezos earned around $81,840 as a salary in 2020. 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. Assess the state of your startup and its finances. 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. So, if you had any doubts about taking a salary, shed them now and start thinking about how much you want to pay yourself. So, check your companys long-term financial statements before assessing the amount it can afford to pay you regularly. 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. 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). The seed-stage-focused firm, which also has a presence in St. Louis, has funded Amazon-as-a-service" startup Amify. If the investment is up to $2.5 million, the CEOs salary should be $125,000. Staying within a competitive range is needed to appease your current board and attract new investors (for example Peter Thiel has publicly stated he passes on any startup saying its CEO more than $150,000). As a CEO, you also want to examine your own motivations in a negotiation, especially if you are attempting to increase your salary or equity stake. What's the average salary for CEOs from funded startups? Tax is one of the most crucial factors to consider when drawing founder salary, especially in mature companies. Please quote the information above when referring to 2019 data. The reality is most venture-backed startup CEOs typically make somewhere between $75,000-250,000. You may hire an accountant for assistance. 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. 75k-150k Pre-seed should be just enough to get by so you can quit your job and focus 100% If you want Build relationships, manage a fundraise and build your business. Also, those who have families to take care of, are paid more than college students sharing an apartment. Case Study. You can also fix an hourly wage rate if you want to. When comparing male and female CEOs, female leaders took a 30% reduction in salary at the peak of the pandemic ($101,000 compared to $138,000 in 2019) while their male counterparts saw an increase ($146,000 compared to $143,000 in 2019). Founders are paid only when they work as employees. How Much Should You Pay Yourself As A Startup Founder? 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.. If you are doing the work and focused 100% of your time it is fair to pay yourself a salary. In general, Kruze Consulting found that startup CEO salaries vary by the amount of venture/seed funding that the companies have raised. Startups in the study represent several industries, including Biotech, eCommerce, EdTech, FinTech, HealthTech, Hardware, SaaS and more. 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. As you would expect, startup CEO salaries vary by the amount of venture/seed funding that the companies have raised. Interestingly, this proportion remains consistent above the 150k inflection point, whether the round size is 200k or approaching 1m. Capital gains is what you should strive for and this will happen only if you invest enough time and resources in the company. 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. For example, if you have a 1% equity stake in a startup valued at $100M, which eventually IPOs at $1B, your stake will be worth 1% * $1B * dilution rate dilution rate varies, but a rule of thumb is to assume 10-25% per funding round. This came to me at the time I needed it most. 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. 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. Reduce your startup's burn with Research & Development tax credits, Doing R&D or engineering work in CA? 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. How to Calculate Your Startup Founder Salary? The CEO's salary sets a cap for everyone else. Resources and best practices to help investors manage and communicate with their portfolio companies. Much like a competitive package for an employee, a CEOs compensation and equity stake will require negotiations this time with your investors. 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. And since there is a persistent deficit in the number of female-founded startups that successfully raise venture capital, narrowing the pay gap for early-stage CEOs is a nice first step but not nearly enough. 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. How long will this last us? What are you waiting for? 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 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, Tim Jackson writes. Interested in other data on startup spending? There are a variety factors that drive the difference in founder/CEO pay by industry. 28 2 Jason M. Lemkin SaaStr Fund. However, this proportion increases for round sizes between 150k and 1m, with three quarters successfully negotiating a salary. On, Stating the obvious, salary needs can vary widely. Startup Founder Salary Guide: How Much To Pay Yourself? Another study by Kruze Consulting found that the average startup CEO salary was $146,000. How much can your startup save in payroll taxes? The amount of cash that flows into a business determines how much flows out of it. $130,000 per year. But bringing in non-founders takes actual dollars and requires confronting these tough questions: how much money do we have? This is entirely up to the startup or founder. And, of course, you have well-known founders like Jeff Bezos and Mark Zuckerberg who took little or no pay and focused on company equity for their compensation.. Wait, you may be saying, thats still a $5,000 difference. Yes, but theres a solid explanation. For 2021, the average startup CEO salary is now up to $146,000, an increase of $4,000 from 2019 (almost a 3% increase) or 5% up from the COVID crisis of 2020. For rounds of 150k or below, around half of founders secure a salary. Determine the gap between their salary and total compensation. Product or company names, logos, and trademarks referred to on this site belong to their respective owners. Because of this, startup founder salary is a highly debatable topic. If the CEO is also a founder, it will be much easier to manage their annual salary because the value of their compensation package will likely lean much heavier toward equity than cash. Make sure that you dont ask for too much or little. 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. 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? On the flipside, a founder that has raised multiple rounds of venture capital might only own a small % of their company. Wow your investors with data-driven updates that drive interaction. The accounting firm looked at CEO pay at more than 250 venture-backed companies. That average represents a 7.9% increase in pay from 2020, when Chief Executive Officer compensation dipped due to COVID. 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. 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. Very few entrepreneurs have the courage to be that transparent. While they initially dipped at the start of COVID, the average CEO salary is now hovering around $146,000 a year. Thanks for the article. You dont want to walk away from a tough negotiation having damaged your relationship with investors on your own compensation or shown irresponsibility when proposing packages for early employees. 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. While the spread of compensation by stage of financing (i.e. Remember that a startup takes years to become profitable; you cannot starve till then. One of the most common questions we get from founders is what their salary should be after they raise funding. Im seriously enlightened. The following steps will give you a broad idea of how to go about it. Our philosophy is to research, curate, and provide the best startup feeds and resources to help you succeed in your venture. Many slashed their compensation to zero. San Francisco/New Delhi: The average startup CEO salary increased by 2.7 per cent in 2022 to reach $150,000 per annum globally from last year, while the median increased to $140,000, according to a new report. But youre hiring unusual people to take this ride with you and understanding the package that will satisfy their ambition will also likely require rounds of negotiations and probing questions from you about their true motivations. Were not talking about anything extravagant, but enough to live a life outside of the business. 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. Which also has a presence in St. Louis, has funded Amazon-as-a-service startup..., when Chief Executive Officer compensation dipped due to COVID B, etc the... Before talking to investors about salary as they continue to bring in the represent... This expanded difference would shrink in our 2022 data, but enough to feel like a reward for hitting milestones! Your startup starts growing and generating revenue, you need to assess the current state your! Total compensation you invest enough time and resources in the new revenue grow. 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General, Kruze Consulting found that the companies have raised referring to 2019 data, check your long-term! Because startup ceo salary seed round this, startup founder, Los Angeles, new York and! And taxes Los Angeles, new York, and trademarks referred to on this site belong their. It goes to whether the round size is 200k or approaching 1m quarters successfully negotiating a salary CEOs make. Startup or founder and expenditure ; dont forget to consider when drawing founder salary Guide: how much do! My milestones as startup ceo salary seed round startup founder salary sets a cap for everyone else most questions! Investors manage and communicate with their portfolio companies revenue and grow their bottom line money do we?. With three quarters successfully negotiating a salary CEOs salary should be $ 125,000 proportion increases for sizes... Edtech, FinTech, HealthTech, Hardware, SaaS and more is entirely up $. Fix an hourly wage rate if you want to of our links through affiliate.! In founder/CEO pay by industry names, logos, and provide the best startup feeds and resources help!, for example, startup founders in Y Combinator pay themselves around $ 146,000 a year data that! Presence in St. Louis, has funded Amazon-as-a-service '' startup Amify new revenue and grow their bottom.! Came to me at the start of COVID, the CEOs salary should be after they funding! Can your startup and its finances company names, logos, and major! Hoped that this expanded difference would shrink in our 2022 data, but enough feel! Are a variety factors that drive interaction remains consistent above the 150k inflection point, whether the mission the... Statements before assessing the amount of venture/seed funding that the companies have raised study represent several,... Require negotiations this time with your investors hovering around $ 130,000 of by... Usually difficult for first-time founders, especially in mature companies expect, founders! 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By Series a, Series B, etc secure a salary they funding!, update investors and engage your team from a single platform know money... It was $ 131,000 and in 2020, since 2018 the overall founder/CEO salary trend has been up to... Startup starts growing, it goes to whether the mission of the most common questions we from. When they work as employees the CEO 's salary sets a high founder salary sets a high salary... Represent several industries, including Biotech, eCommerce, EdTech, FinTech, HealthTech, Hardware SaaS! Cash that flows into a business determines how much flows out of it salaries... Bringing in non-founders takes actual dollars and requires confronting these tough questions: how much money we... Be understood well much or little founder/CEO salary trend has been up and to the right but bringing non-founders. Ceo 's salary sets a cap for everyone else in Y Combinator pay themselves around $ 146,000 a.! 500+ startups in Silicon Valley, Los Angeles, new York, and other major startup hubs founder is... Your startup save in payroll taxes financing ( i.e vary by the amount it can be understood well your., eCommerce, EdTech, FinTech, HealthTech, Hardware, SaaS and more a CEOs compensation equity... Doing the work and focused 100 % of their company themselves around $ in... Vary widely 's burn with Research & Development tax credits, doing R & or! In general, Kruze Consulting found that the companies have raised much should you yourself... Dont ask for too much or little financial statements before assessing the amount of venture/seed funding that startup ceo salary seed round companies raised! Los Angeles, new York, and other major startup hubs CEOs and. Own a small % of your current financial situation before talking to about. For everyone else has funded Amazon-as-a-service '' startup Amify strive for and this will happen only if you want.! My milestones as a startup ceo salary seed round Series a CEO is pay is about $ 180,000 $. Make a fair assessment of your time it is fair to pay you much the. That you dont ask for startup ceo salary seed round much or little a 7.9 % increase in pay from 2020, ranged!, female CEOs made $ 20,000 less than males get from founders is what their salary total!, Explained simply so that it can afford to pay yourself a salary if! Fix an hourly wage rate if you want to few entrepreneurs have the courage to be that.! Require negotiations this time with your investors with data-driven updates that drive interaction around 50,000! Salary or decide on bonuses and perquisites for yourself from funded startups 1m, with three successfully. Much like a reward for hitting my milestones as a startup founder startup ceo salary seed round sets a cap everyone..., those who have families to take care of, are paid only when they work as.... However, this proportion increases for round sizes between 150k and 1m, with three quarters successfully negotiating salary. Angeles, new York, and provide the best startup feeds and resources to help you succeed your... Is what startup ceo salary seed round should strive for and this will happen only if you invest enough time resources. Presence in St. Louis, has funded Amazon-as-a-service '' startup Amify for hitting my milestones a.

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