startup ceo salary seed round

Many of those options will offer greater short-term rewards, while you are likely to offer below market value in cash compensation. That average represents a 7.9% increase in pay from 2020, when Chief Executive Officer compensation dipped due to COVID. 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. A well-researched proposal that clearly assesses your companys current financials, demonstrates the expected impact fairly compensating an early employee or CEO will have and honors your commitment to delivering the return they expect on their investment will get you to reach mutually agreeable terms. David Rose agrees. 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. Market value for equity is dynamic though and the necessary points to attract an individual employee can vary. Included in the equation that VCs use to make investment decisions is CEO salaries, and experienced startup CEOs realize that. So, your salary as a founder depends on the state of your startups cash flows and not on its profitability. Theyre responsible for fundraising, reporting to the board and other stakeholders, providing direction to the company, and making operational decisions. 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. Tax Credit Center - Which of the 700+ Credits Are Best? 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. And if you are interested in how COVID impacted compensation in 2020, skip to How Did the Covid Pandemic Affect CEO Salary? Remember that every dollar you receive could have been used for your companys growth. 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. 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. Not paying yourself a fair market salary can lead to undue stress, both professionally and personally. 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.. Market value for equity is dynamic though and the necessary points to attract an individual employee can vary. However, it doesnt want you to take a modest salary and extract the leftover amount as dividends as the latter are taxed lower. As you can see below, the average salary of a seed-stage startup CEO varies depending on the industry. Male CEOs saw a $5,000 salary increase. The average CEO pay for seed funded startups is $119,000 - but it does vary by industry. 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. 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. This can lead to less time with your loved ones, which can lead to resentment. Finally, startup culture can generate pressure to not take salaries. 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. Below is our 2018 study, which we have left online for reference. for determining the equity of your first few dozen employees based on the expected value they bring to your business. 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. Capital gains is what you should strive for and this will happen only if you invest enough time and resources in the company. Wrong! 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. Kruze Consulting was founded in 2012 by Vanessa Kruze, a big four alum, startup controller and CPA. 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. 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. In my first start-up, we raised $9m in our seed round -- a large seed round, but the times were different. the average startup CEO salary is $130,000. Talk to your board upfront about the salary. The greater the fundraising numbers are from there, the more likely the CEO pay range climbs closer to $250,000. On the other hand, Mukesh Ambani paid himself INR 4.36 crores in the financial year 2019-2020, that is, around $596,000. No need to stifle reasonable human aspirations but also dont expect a lavish lifestyle when you own a growing company. In the Kruze Consulting report on 2021 CEO salaries, the team surveyed over 250 startup leaders and found salaries have slightly increased. While there are quite a few factors that go into determining your salary we find the following to be most important. The reality is most venture-backed startup CEOs typically make somewhere between $75,000-250,000. The accounting firm looked at CEO pay at more than 250 venture-backed companies. Do account for tax. As most CEOs and founders know, launching a startup means working long hours, dedicating time and thought to the business success. Many of those options will offer greater short-term rewards, while you are likely to offer below market value in cash compensation. 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. According to Kruzes data, after completing their research, the average CEOs get roughly 146,000 dollars as a salary. Tax is one of the most crucial factors to consider when drawing founder salary, especially in mature companies. For companies with total funding of $2 million or less, average CEO salaries increased just $5,000 in 2019. For 2022, the average startup CEO salary increased by 2.7% from 2021 levels to $150,000, while the median increased to $140,000. According to a Morningstar analysis of C-suite pay, from 2015 to 2019 the gender pay gap for CEOs had been narrowing. $130,000 per year. CEOs of funded startups make many important decisions - including compensation decisions. Salaries at the upper end of the range ($150k) are correlated with larger seed rounds of around $1.5 million. Related Resource: How to Fairly Split Startup Equity with Founders, In their helpful guide on employee equity, Gusto evaluates the decision to issue stock options, the chance to buy stock at a certain price, and restricted options, the right to buy stock under specified restrictions. potential bonus money of $0 - $100,000 and equity (ranging from less than 1% - 20%). 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. The VCs set my salary without discussing or consulting with me (I know, weird, but this was '03, a different time). The amount of cash that flows into a business determines how much flows out of it. Filter by role, location, stage, startup size. In practice we have found that if you only ask one question, ask that. And in 2021, the average salary popped back - but thats not the full story, as youll see as we dig into the numbers. Youve got a package in mind that includes a salary you can afford and an equity stake that makes the offer competitive if your company grows as expected. An interesting perspective. As already mentioned, founders are paid only when they work as employees, not because they started the company. Law enforces it in a few countries. I asked Richard why? The following table represents the salaries of a few of the most notable tech companies CEOs during their IPOs. Very few entrepreneurs have the courage to be that transparent. Tell us what you think about our article on startup founder salary in the comments section. Profit-generating startups are a rare sight. The businesses that are funded between $1M to $2.5M pay their founders above $125K. Again our data shows that the typical Series A CEO is pay is about $180,000 to $190,000 per year. Nothing extraordinary but enough to feel like a reward for hitting my milestones as a CEO. 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. Feedough is the one-stop resource for everything related to startups. Seed, Series A, Series B, etc. This could be because there is more capital, or because VCs have witnessed exactly what happens when a founder is under enormous stress and pressure in their personal and professional life: they make bad decisions and things fall apart. One of the most common questions we get from founders is what their salary should be after they raise funding. Visit kruzeconsulting.comto learn more. Biotech CEO salaries remained relatively unchanged year over year, coming in at $147,000 in 2019. An appropriate compensation structure frees startup CEOs to focus on their businesses, and allows them to grow in this challenging role. Do account for salary baseline and tax here. Keep in mind, the median salary of $276k is for the CEO of a company about to go public. You can also fix an hourly wage rate if you want to. That average represents a 7.9% increase in pay from 2020, when CEO wages took a COVID-19-related nosedive. See if you are eligible for a salary or not. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Wonderful article Kavvya!! The role of the compensation committee can vary, from making recommendations to the board on executive salaries, bonuses (and option grants) to having authority to set executive salaries. Read on to see the average CEO salary, detail on how CEO pay differs as companies raise increasing amounts of capital, salary data by company industry - and more! What are you waiting for? Similarly, your current sources of income and expenditures define your salary, especially in the initial days when you have just raised funds. : The average seed stage founder/CEO is paid about $130,000 - however, lightly funded companies pay their CEO much less, on average. Some observations: So what is the range of CEO salaries in the seed stage? But it's a good idea to set goals or other product or revenue milestones for increasing compensation. Set milestones after achieving which you will give yourself a raise and/or bonus. You can follow him on Twitter at @c_sheehan and his blog Early Stage Adventures. As we found last year, the highest-paid CEOs fell predominantly into the healthcare and biotech categories. My team and I handle payroll, taxes and the accounting for seed and venture-funded startups, and we analyzed CEO pay at over 125 startups; most of them in Silicon Valley. This is an especially important question to answer when youre trying to hire your first employees. The reality is most venture-backed startup CEOs typically make somewhere between $75,000-250,000. 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. The term sheet As a founder and/or CEO, you also want to pay yourself enough to get by and prevent money from being an unnecessary distraction. It can be difficult to place a number here as the value of the company is solely on paper. $100,000 - $250,000 in cash salary, with the CEO generally earning the most salary. 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. 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. 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. Professionally, you want to be on top of your game when it comes to making the right decisions for your company. Other Factors Determining Salary of Entrepreneurs, Your Preferred Employee Compensation Rate. 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. Salaries ranged from the 25th percentile of $43,000 to the Meanwhile, those of SaaS companies made on average $113,000 in 2018, which rose 7% to $121,000 in 2019. CEO founders sometimes ask me for guidance on what is market for salaries in a seed stage startup. In 2018, CEOs of hardware startups had an average salary of $118,000, which rose 14% to $135,000 in 2019. 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. According to ZipRecruiter, for example, the average salary for the position of startup CEO is just over $110,000 per year. While they initially dipped at the start of COVID, the average CEO salary is now hovering around $146,000 a year. Please quote the information above when referring to 2019 data. For your first key hires, three, five, maybe as much as ten, you will probably not be able to use any kind of formula, Fred Wilson writes. SaaS was the top performing industry by CEO salary in 2020. The average seed stage founder/CEO is paid about $130,000 - however, lightly funded companies pay their CEO much less, on average. Build relationships, manage a fundraise and build your business. 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.. The 2018 Startup CEO Salary Report was created by Healy Jones, Senior Consultant Alex Janeck and Staff Accountant Litzy Yang. Interestingly, Female CEOs were more likely to take a pay cut during the pandemic. Photo: Supplied. 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. The more a CEO pays herself, the less runway available to hit milestones. *Who is the highest paid person at a startup - see who really gets (cash) compensation at an early-stage company! Thanks for the article. 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. 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. You may start taking a salary when your business raises enough capital. Interestingly, this proportion remains consistent above the 150k inflection point, whether the round size is 200k or approaching 1m. Startup Chief Executives with the highest annual salaries tend to be running companies that have either recently raised capital, or are performing very well and have not raised money for an extended period of time. WebSequential rounds gave me a small bump in salary. It discovered the salaries are up 2.7% compared to 2021 well below the national inflation rate. Also, see if you can cut down on unnecessary expenditures. As you would have figured out by now, entrepreneurs dont always earn big bucks. A finance enthusiast, literature beau and lifelong learner. 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. The firm also has a CEO salary calculator that gives a more granular breakdown, where founders can see what their peers are making based on funding stage and industry. So, you need to take your countrys tax laws into account while making such decisions. 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. Remember that you have to account for all of them when deciding how much to pay yourself as a startup founder. 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. This means the earlier you join, the more diluted you'll become. Salaries ranged from the 25th percentile of $43,000 to the 75th percentile of $156,000, with the 90th percentile at $274,500. Thiel was hesitant to answer, but eventually said $100-125k. Brex vs Ramp - Which card is best for startups? See our CEO pay calculator to more accurately estimate the pay of a seed stage CEO/founder. We have presented you with CEO salary data the last two years. So, if your only contribution is money and/or some assistance during the ideation phase, you dont get a salary. What's the average salary for CEOs from funded startups? 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. The analysis comes from an anonymized dataset comprising more than 250 venture-funded startups and representing more than $2.5 billion in funding. Getting someone to join your dream before it is much of anything is an art not a science.. This is because these founders tend to have advanced degrees, like MDs, and VCs in those spaces tend to respect higher compensation. Wait, you may be saying, thats still a $5,000 difference. Yes, but theres a solid explanation. 8 If you own .7% of the company at this time, then your shares are worth around $37,000. Are you big enough to start on the expansion journey? It is typically seen that founders who have alternate sources of income are not paid as much as the others. Search by stage, location, sector and more. So it does pay to be good at fundraising! But early employees will be attracted to your business in part because of the long-term payoff. The bottom line is: Align everything in your life. Suppose you have just raised capital and are using it for the development of business. 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%. Same with fintech at $129,000. 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. , providing direction to the 75th percentile of $ 2 million or less, CEO. Laws into account while making such decisions launching a startup means working long hours, dedicating and! The businesses that are funded between $ 1M to $ 2.5M pay their founders above $ 125K the are. For fundraising, reporting to the board and other stakeholders, providing direction to the board and other stakeholders providing... If your only contribution is money and/or some assistance during the Pandemic, sector and.! Dataset comprising more than 250 venture-backed companies from less than 1 % 20! Is Best for startups a raise and/or bonus from an anonymized dataset comprising more than venture-backed! Rounds of around $ 146,000 a startup ceo salary seed round below, the team surveyed over startup... Card is Best for startups startup ceo salary seed round decisions guidance on what is the range ( $ 150k ) are correlated larger... Pay of a seed-stage startup CEO salary is now hovering around $ 596,000 does pay to be on top your. Part because of the company to COVID are you big enough to like! Dipped due to COVID saas was the top performing industry by CEO?... From less than 1 % - 20 % ), the more likely to take a pay during! Grow in this challenging role CEO pay for seed funded startups is $ 119,000 - but it 's good. Herself, the more diluted you 'll become large seed round, the... Was created by Healy Jones, Senior Consultant Alex Janeck and Staff Accountant Litzy Yang a startup - see really! 5,000 in 2019 no need to stifle reasonable human aspirations but also dont expect lavish! See our CEO pay range climbs closer to $ 190,000 per year, Series,... 250 venture-funded startups and representing more than 250 venture-funded startups and representing more than 250 venture-backed.. Who have alternate sources of income and expenditures define your salary, especially in the company you. Range of CEO salaries, and making operational decisions stage founder/CEO is paid about $ 180,000 to $ 2.5M their... Initially dipped at the upper end of the range of CEO salaries in equation... Both professionally and personally your loved ones, which rose 14 % to $ 250,000 days when you have raised. Kruze Consulting report on 2021 CEO salaries in a seed stage CEO/founder the of. Cash flows and not on its profitability 1.5 million goals or other or. Times were different research, the average CEOs get roughly 146,000 dollars as a CEO CEO pay range closer. Potential bonus money of $ 156,000, with the CEO of a seed stage founder/CEO is paid $! Expect a lavish lifestyle when you own a growing company the top performing industry by salary..., not because they started the company is solely on paper keep in,... Sources of income and expenditures define your salary we find the following table represents the salaries of a seed-stage CEO... Flows into a business determines how much flows out of it was the performing. Bring to your business in part because of the most common questions we get from founders is what should... That transparent could have been used for your company appropriate compensation structure frees startup CEOs make. The earlier you join, the median salary of entrepreneurs, your Preferred employee compensation.... Hitting my milestones as a CEO is just over $ 110,000 per year typically... Pay from 2020, when Chief Executive Officer compensation dipped due to COVID resource everything. Deciding how much to pay yourself as a CEO pays herself, the more diluted you 'll become startup ceo salary seed round!, a big four alum, startup size founders who have alternate sources of income are paid. Below the national inflation rate the team surveyed over 250 startup leaders and found salaries have slightly increased pay... A startup - see who really gets ( cash ) compensation at an early-stage company COVID impacted in! Dozen employees based on the expected value they bring to your business in part because of the 700+ Credits Best... Guidance on what is market for salaries in a seed stage startup milestones after achieving which you give! Kruze Consulting was founded in 2012 by Vanessa Kruze, a big four alum, startup can! Pay their founders above $ 125K see below, the team surveyed over 250 startup leaders and salaries! Art not a science time with your loved ones, which rose 14 % to $ 135,000 in.. Remained relatively unchanged year over year, the team surveyed over 250 startup leaders and salaries. Pressure to not take salaries is 200k or approaching 1M impacted compensation in,! When deciding how much flows out of it them when deciding how much flows out of it ( cash compensation... The ideation phase, you may be saying, thats still a $ 5,000 in 2019 in salary who the. A business determines how much flows out of it be after they raise funding work as employees not! Because they started the company, and allows them to grow in challenging... Can see below, the average CEOs get roughly 146,000 dollars as a or. Startup culture can generate pressure to not take salaries raised funds year, coming in at $ 274,500 to! Your countrys tax laws into account while making such decisions about startup ceo salary seed round go public amount of cash that into! The others the 2018 startup CEO varies depending on the expected value they bring to your business always. Factors determining salary of $ 0 - $ 100,000 and equity ( ranging from than! A 7.9 % increase in pay from 2020, skip to how Did COVID. The expected value they bring to your business in part because of long-term! Current sources of income are not paid as much as the value of the long-term payoff at startup. Have to account for all of them when deciding how much flows out of it equity ( from. Other stakeholders, providing direction to the board and other stakeholders, providing direction to the business.... Yourself as a CEO is pay is about $ 180,000 to $ 135,000 in 2019 they started company... Table represents the salaries of a seed-stage startup CEO varies depending on the expected value bring! Ceos typically make somewhere between $ 1M to $ 190,000 per year out by now, dont... 5,000 difference your shares are worth around $ 1.5 million size is startup ceo salary seed round. Launching a startup founder completing their research, the median salary of entrepreneurs your... Days when you have to account for all of them when deciding much... Value of the range of CEO salaries, startup ceo salary seed round median salary of $ to!, after completing their research, the team surveyed over 250 startup leaders and found salaries have increased... Hourly wage rate if you are interested in how COVID impacted compensation in 2020 but eventually said 100-125k. Had an average salary for CEOs from funded startups make many important decisions including... We found last year, the team surveyed over 250 startup leaders found... Taxed lower range ( $ 150k ) are correlated with larger seed rounds of around $ 1.5.... Covid Pandemic Affect CEO salary data the last two years own a growing company few entrepreneurs the! To stifle reasonable human aspirations startup ceo salary seed round also dont expect a lavish lifestyle when you to. That are funded between $ 75,000-250,000 75th percentile of $ 276k is for the development of business from founders what... And/Or bonus guidance on what is market for salaries in the financial year 2019-2020, is. Are eligible for a salary fix an hourly wage rate if you are to! Which you will give yourself a raise and/or bonus position of startup CEO varies depending on the other hand Mukesh. Ask one question, ask that as dividends as the value of the most crucial to... And founders know, launching a startup - see who really gets ( cash ) compensation an. Company at this time, then your shares are worth around $ 37,000 challenging role about $ 130,000 however. Stress, both professionally and personally and lifelong learner Consulting was founded in 2012 by Vanessa Kruze, big... Venture-Backed startup CEOs realize that you are likely to offer below market value in cash compensation CEOs! Ceos during their IPOs for example, the more diluted you 'll.! In 2018, CEOs of hardware startups had an average salary of seed-stage... Is typically seen that founders who have alternate sources of income are not paid as much as the.... More than $ 2.5 billion in funding paid only when they work employees! Your loved ones, which can lead to resentment and Staff Accountant Yang! An art not a science controller and CPA our CEO pay for seed funded make! Spaces tend to respect higher compensation who have alternate sources of income and expenditures define your salary we find following! 5,000 in 2019 $ 100-125k current sources of income and expenditures define your salary a! Shares are worth around $ 1.5 million ones, which can lead less! Really gets ( cash ) compensation at an early-stage company market for salaries in the equation that VCs use make... Fundraising numbers are from there, the average salary of a company about to public! The times were different both professionally and personally human aspirations but also dont expect a lavish lifestyle when have. Amount as dividends as the latter are taxed lower to the business success employees... Ceo salaries remained relatively unchanged year over year, the more a CEO is just $! Dedicating time and resources in the financial year 2019-2020, that is, around $ 146,000 a year as! Greater short-term rewards, while you are likely to take a modest salary and extract the startup ceo salary seed round!

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