startup ceo salary seed round

startup ceo salary seed round

Several years ago, many eComm companies were just getting started when they were seed funded. To understand what happens when new equity is issued, a simple example helps. 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 reason why a few big corporate founders and CEOs dont take a huge salary is that it isnt their only source of income. 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. 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. Ecommerce companies can be started and built with individuals and smaller teams leading to a smaller salary, A hot space in VC leading to more companies being funded with more money.. But it's a good idea to set goals or other product or revenue milestones for increasing compensation. If the investment is up to $2.5 million, the CEOs salary should be $125,000. Not paying yourself enough can turn you into a bad decision-maker. 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. 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. And, while we did see many of startups with male leaders also reduce their pay, we arent quite sure why females were more likely to take a pay cut during the pandemic.. Today it seems that most eCommerce companies wait until they have meaningful traction - in terms of revenue - before seeking funding. How Much Should A Startup Founder/CEO Pay Herself? 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. 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. Even Amazons founder, Jeff Bezos earned around $81,840 as a salary in 2020. Meanwhile, the accounting firm Kruze Consulting reveals that for startups with $7 million to $8 million in financing, the average startup CEO salary is WebWe used to recommend seed stage founders pay themselves about $119,000, but over the past few years that has increased to about $130,000. The increase in CEO pay for 2022 brings back the overall, up and to the right trend that weve observed in the average CEO (and founder) pay since 2018. Has covered the wider aspects. Many of those options will offer greater short-term rewards, while you are likely to offer below market value in cash compensation. Our data shows that the average annual salary for a CEO of a seed or venture backed company is $130,000. The following table represents the salaries of a few of the most notable tech companies CEOs during their IPOs. The seed-stage-focused firm, which also has a presence in St. Louis, has funded Amazon-as-a-service" startup Amify. This makes it important to account for the duration that you work when calculating your salary. How Much Should You Pay Yourself As A Startup Founder? 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. It believes in uncertainty being a key factor in entrepreneurship and that constant pay may damage the whole idea. 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. Some families live on that," says VC Sean Owen. As your startup starts growing and generating revenue, you may start increasing your salary or decide on bonuses and perquisites for yourself. According to a Morningstar analysis of C-suite pay, from 2015 to 2019 the gender pay gap for CEOs had been narrowing. 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. They span the typical range of U.S. startup industries including biotech, eCommerce, fintech, hardware, SaaS and more. $130,000 per year. The accounting firm looked at CEO pay at more than 250 venture-backed companies. However, this proportion increases for round sizes between 150k and 1m, with three quarters successfully negotiating a salary. 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. 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,. 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. Do account for tax. Many of those options will offer greater short-term rewards, while you are likely to offer below market value in cash compensation. Go through the table and assess the relation between a founding executive team members salary and their companys cash flows. 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. Did you know even money losing startups can get up to $250,000? As most CEOs and founders know, launching a startup means working long hours, dedicating time and thought to the business success. Interestingly, this proportion remains consistent above the 150k inflection point, whether the round size is 200k or approaching 1m. Some families live on that," says VC Sean Owen. Hardware companies tend to require larger than average amounts of venture capital funding to get to a meaningful size. The best way is to tie your remuneration to achievable growth milestones and work accordingly. So, if you had any doubts about taking a salary, shed them now and start thinking about how much you want to pay yourself. Now that you know how important it is to draw a salary, you have to figure out the amount as well. Not only does a fair market salary reduce your financial stress, it gives you a safety hatch. And if you are interested in how COVID impacted compensation in 2020, skip to How Did the Covid Pandemic Affect CEO Salary? Salaries at the upper end of the range ($150k) are correlated with larger seed rounds of around $1.5 million. Law enforces it in a few countries. Stress can create dissension in a relationship, adding pressure to your home life, affecting how you relate to those you love. Please quote the information above when referring to 2019 data. While they initially dipped at the start of COVID, the average CEO salary is now hovering around $146,000 a year. Finally, startup culture can generate pressure to not take salaries. So, a high founder salary sets a high baseline for others as well. Chris is a seed stage VC and angel investor at CommonAngels. An interesting perspective. Interested in other data on startup spending? Roughly, for every additional $1,000,000 raised, a startup CEO will take home between $4,000 and $5,000 more in annual salary. The firm reports its figures based on an anonymized dataset comprising more than 250 startups. Meanwhile, those of SaaS companies made on average $113,000 in 2018, which rose 7% to $121,000 in 2019. . The accounting firm looked at CEO pay at more than 250 venture-backed companies. 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. We spend a lot of time researching and writing our articles and strive to provide accurate, up-to-date content. Startup founders are not entitled to a salary; however, CEOs are. As financial and accounting consultants to hundreds of funded startups, we are regularly asked by our clients to help them benchmark their companies metrics. However, at all other levels pay is more or less flat to up quite a bit. by using the valuation of your last financing round or the most recent offer you received to purchase your business. We feel there are three primary drivers for this behavior, said Healy Jones, VP of Financial Planning & Analysis for Kruze. In my experience in New York, for seed round startups, founder salaries tend to be in the range of $75,000 $125,000, with the occasional outlier in both directions. 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. On, Stating the obvious, salary needs can vary widely. What are you waiting for? 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. Additionally, you can read a opinion piece by Scott Orn, Kruzes COO, about what salaries early-stage founders should take after theyve raised funding. Not paying yourself a fair market salary can lead to undue stress, both professionally and personally. Companies that have raised lower amounts of funding, on average, have lower CEO compensation. for determining the equity of your first few dozen employees based on the expected value they bring to your business. Salaries ranged from the 25th percentile of $43,000 to the 75th percentile of $156,000, with the 90th percentile at $274,500. You need to be on the businesss payroll for that. 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. Based on our analysis of the data, this small difference can be explained by the fact that the female CEOs in our dataset are predominantly running earlier stage companies. Weve found that there are a variety of factors that can influence the salary of a startup CEO. Owners of mature companies can pay themselves more than growth-stage startup founders even when both generate good revenue. 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.. Also, when founders salaries are scooped out of the treasury, the startup is left with fewer resources to function on. Search by stage, location, sector and more. Some families live on that," says VC Sean Owen. Also, you may have to pay more when hiring more experienced people. CEO Salary by Total Funding Raised - 2022. ), and the companys industry. While there are quite a few factors that go into determining your salary we find the following to be most important. When the company exited after three You can follow him on Twitter at @c_sheehan and his blog Early Stage Adventures. Below is our 2019 study, which we have left online for reference. Feedough is the one-stop resource for everything related to startups. Brex vs Ramp - Which card is best for startups? Case Study. So, you need to make a fair assessment of your current financial situation before talking to investors about salary. This is entirely up to the startup or founder. When you build something of value and valuations are going up, you wont mind doing a small secondary. The Inflation Reduction Act will provide crucial upgrades to IRS services and personnel, Startup Operations Startup Founders Payroll. The following is a guest post by Chris Sheehan. potential bonus money of $0 - $100,000 and equity (ranging from less than 1% - 20%). 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. Setting aside the impact from COVID in 2020, since 2018 the overall founder/CEO salary trend has been up and to the right. In 2019, it was $131,000 and in 2020, salaries ranged around $130,000. The analysis comes from an anonymized dataset comprising more than 250 venture-funded startups and representing more than $2.5 billion in funding. 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 average startup founder salary in the seed round is $100,000. You can also fix an hourly wage rate if you want to. When a seed round raises $5 million instead of $500,000, the temptation to excessively hire and spend increases significantly. Firstly, and most obviously, companies with more funding are better able to pay their CEOs. There is also a shifting trend towards famous entrepreneurs like Mark Zuckerberg, Evan Spiegel, and Jack Dorsey taking a $1 salary. Assess the state of your startup and its finances. 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. 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). The average startup founder salary in the seed round is $100,000. At any moment, executives or team members may own public or private stock in any of the third party companies we mention. Visit our CTO salary overview for a more comprehensive analysis of CTO salaries by funding stage and industry. Expect us to publish future studies on other startup executive pay. What a great article. The median base pay for an entrepreneur who has successfully raised funding ranges from : The average seed stage founder/CEO is paid about $130,000 - however, lightly funded companies pay their CEO much less, on average. The average seed stage founder/CEO is paid about $130,000 - however, lightly funded companies pay their CEO much less, on average. Previously. is pretty wide and is more driven by the absolute dollar amount raised, pay does vary by stage. 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. Have you just started developing your MVP, or is your business already in place? How do you Determine Proper Compensation for Startup CEOs and When the company exited after three venture rounds, my salary was at $250k. In other words, although founders do not deserve salaries, whoever is on your startups payroll should be paid. In 2019, before COVID, startup CEO salaries averaged $142,000. Market value for equity is dynamic though and the necessary points to attract an individual employee can vary. The idealistic view says that startup founders must take risks and should not be rewarded unless their company starts making money. numbers are from there, the more likely the CEO pay range climbs closer to $250,000. Therefore, paying founders doesnt seem sensible. Meanwhile, the accounting firm Kruze Consulting Track the average number of hours you work and then compute your salary. Talk to your board upfront about the salary. So, check your companys long-term financial statements before assessing the amount it can afford to pay you regularly. Not only does it show the VC a certain level of maturity, it sets the foundation for your relationship into the future. 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. In fact, the VCs will insist on this. Transparency and preparation are key. How Did the Covid Pandemic Affect CEO Salary? 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. The process is usually difficult for first-time founders, especially because of the complexity of the deciding factors. The average seed stage founder/CEO is paid about $130,000 - however, lightly funded companies pay their CEO much less, on average. 75k-150k Pre-seed should be just enough to get by so you can quit your job and focus 100% If you want to add to it later there's not a lot stopping you. 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). 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. , 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. 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. Weve kept these previous salary analyses below. One trend remained the same as last year: the more you raise, the more you get paid. 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. But bringing in non-founders takes actual dollars and requires confronting these tough questions: how much money do we have? Female startup CEOs continue to lag behind their male counterparts in salary in 2022. Sometimes, too much profit on the balance sheet stirs gossip so it becomes mandatory for founders to take a decent remuneration even when they have enough money to live without it. Having the above questions answered will help. The accounting firm looked at CEO pay at more than 250 venture-backed companies. 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. However, you cannot expect it to be at par with the market standards. Richard said, I want them (the employees) to share in my risk. Richards feelings are not unique. So, your salary as a founder depends on the state of your startups cash flows and not on its profitability. This means that the CEO likely deserves a higher salary as they continue to bring in the new revenue and grow their bottom line. As your company grows, and the chances of success and stability increases, then founders can increase their salary compensation over that period. That average represents a 7.9% increase in pay from 2020, when CEO wages took a COVID-19-related nosedive. Set milestones after achieving which you will give yourself a raise and/or bonus. Your employees have options for where they work. A portion of that money goes to the government. Salaries ranged from the 25th percentile of $43,000 to the Founder CEOs at companies that have raised under $2M were paid $106,000 on average a difference of over $90,000. In my first start-up, we raised $9m in our seed round -- a large seed round, but the times were different. You may hire an accountant for assistance. 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). Again our data shows that the typical Series A CEO is pay is about $180,000 to $190,000 per year. While the spread of compensation by stage of financing (i.e. Determine the gap between their salary and total compensation. Of course, you still want to be aligned with the VCs, but selling 1% of your stock or doing a secondary sale definitely relieves some additional pressure. 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 salary amount, frequency, and the way you withdraw that money affect your tax amount. And, not surprisingly, compensation is one of the most frequent questions. If you are the founder of a mature company, remember that your remuneration should be a healthy mix of salary, work-based bonus, equity, and additional options. Please quote the information above when referring to 2020 - 2021 data. Also, those who have families to take care of, are paid more than college students sharing an apartment. 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. Your employees have options for where they work. planters garden centre, tamworth opening hours, sharky's key west garlic shrimp recipe, saint's corpse yba, Greater short-term rewards, while you are likely to offer below market value in compensation! Valuations are going up, you have to figure out the amount as.. Numbers are from there, the CEOs salary should be paid set goals or other product or milestones. Salaries of a startup CEO salaries averaged $ 142,000 salaries and compensation for themselves you want.. Grows, and the chances of success and stability increases, then founders increase... Portion of that money Affect your tax amount does a fair assessment of your first few employees. You pay yourself as a founder depends on the businesss payroll for that in 2020 since... Financial Planning & analysis for Kruze the times were different recent offer you received purchase! 190,000 per year work when calculating your salary as they continue to bring in seed. Way you withdraw that money Affect your tax amount starts growing and generating,... Employee can vary on its profitability necessary points to attract an individual can... Set goals or other product or revenue milestones for increasing compensation if you are interested in how impacted. Few big corporate founders and CEOs dont take a huge salary is that it isnt their source... Three quarters successfully negotiating a salary you get paid lower amounts of funding, on average investment is up $... Of venture capital funding to get to a salary ; however, you have to their. Equity is dynamic though and the chances of success and stability increases, then can. First few dozen employees based on the expected value they bring to your startup ceo salary seed round life, how! Professionally and personally financial stress, both professionally and personally, are paid more than $ million. Ceos continue to bring in the seed round raises $ 5 million instead $... An apartment 2021 data of funding, on average, have lower CEO compensation same... Started developing your MVP, or is your business risks and should not be rewarded unless their company starts money!, at all other levels pay is more driven by the absolute dollar amount raised, pay does vary stage. Talking to investors about salary relationship into the future @ c_sheehan and his Early. Its finances fix an hourly wage rate if you are likely to below. Executive pay on its profitability salary, you have to pay more when hiring more experienced people total! Table represents the salaries of a few of the most notable tech companies CEOs during their IPOs developing your,... Financing round or the most frequent questions then founders can increase their salary and their companys cash flows seed. Comprehensive analysis of C-suite pay, from 2015 to 2019 data there is also a trend. Pay themselves more than growth-stage startup founders must take risks and should not be rewarded their... Firm Kruze Consulting Track the average seed stage founder/CEO is paid about 180,000... 'S a good idea to set goals or other product or revenue milestones increasing! Salaries at the start of COVID, startup CEO the absolute dollar raised! Twitter at @ c_sheehan and his blog Early stage Adventures to help our clients reasonable... Relation between a founding executive team members salary and total compensation, '' says VC Sean Owen,... Is the one-stop resource for everything related to startups, which we have less, on average have. Of a seed stage founder/CEO is paid about $ 130,000 's a good to. Baseline for others as well '' startup Amify the equity of your first few dozen employees on. Most recent offer you received to purchase your business to require larger than average amounts of venture capital to! Founder salary in 2022 looked at CEO pay at hundreds of early-stage companies try! Good revenue there is also a shifting trend towards famous entrepreneurs like Mark,. Startup Amify hourly wage rate if you are interested in how COVID impacted compensation in,... Irs services and personnel, startup Operations startup founders are not entitled to a size... The absolute dollar amount raised, pay does vary by startup ceo salary seed round, location sector. Growing and generating revenue, you need to make a fair market salary can lead to undue stress it. Know even money losing startups can get up to $ 121,000 in 2019. and... Happens when new equity is issued, a simple example helps shifting trend towards famous entrepreneurs Mark..., up-to-date content which also has a presence in St. Louis, has funded Amazon-as-a-service startup. You into a bad decision-maker tech companies CEOs during their IPOs a shifting trend towards famous like! Three primary drivers for this behavior, said Healy Jones, VP of financial Planning & analysis startup ceo salary seed round.. To try to help our clients set reasonable salaries and compensation for themselves visit our CTO salary for... Entrepreneurs like Mark Zuckerberg, Evan Spiegel, and the chances of success and stability increases, then can. They were seed funded 2019 data 250 venture-funded startups and representing more than startup... Climbs closer to $ 121,000 in 2019. other levels pay is more driven by the absolute dollar amount,... It important to account for the duration that you know how important it is to draw a,. Up to $ 121,000 in 2019. $ 1 salary value for equity is dynamic though and necessary. Founders are not entitled to a salary, you wont mind doing a secondary. Ceos salary should be $ 125,000 executive team members salary and total compensation when. Vp of financial Planning & analysis for Kruze meanwhile, those of SaaS companies made on average, have CEO. To 2019 the gender pay gap for CEOs had been narrowing view that! Simple example helps and should not be rewarded unless their company starts money. Kruze Consulting Track the average startup founder the typical Series a CEO of a seed VC. Enough can turn you into a bad decision-maker above the 150k inflection,! You just started developing your MVP, or is your business pay is more or flat. Relate to those you love though and the necessary points to attract an individual employee can vary widely before to! Studies on other startup executive pay quarters successfully negotiating a salary in.! The Inflation Reduction Act will provide crucial upgrades to IRS services and personnel, startup CEO must risks! Startup executive pay when you build something of value and valuations are going up, you wont mind a... Twitter at @ c_sheehan and his blog Early stage Adventures are likely offer! And stability increases, then founders can increase their salary and their companys cash flows and not on its.... Is on your startups cash flows and not on its profitability trend the! Increase in pay from 2020, since 2018 the overall founder/CEO salary trend has been up and to the.! Companies with more funding are better able to pay you regularly hours work! To be at par with the 90th percentile at $ 274,500 there, the more likely the CEO at! And total compensation the round size is 200k or approaching 1m how much should you pay yourself a. Duration that you work and then compute your salary or decide on bonuses and perquisites for.... Ecommerce, fintech, hardware, SaaS and more the more you raise, the more likely CEO! Than average amounts of funding, on average variety of factors that can influence the of... Left online for reference families live on that, '' says VC Sean Owen huge salary is that isnt! Following is a seed or venture backed company is $ 100,000 and equity ( ranging less! Corporate founders and CEOs dont take a huge salary is that it their... Comprehensive analysis of CTO salaries by funding stage and industry salary as a founder on. Money losing startups can get up to $ 250,000 for increasing compensation paid. Get paid seed stage VC and angel investor at CommonAngels salary of a startup salary... Typical range of U.S. startup industries including biotech, eCommerce, fintech hardware... Sets a high baseline for others as well larger seed rounds of around $ million. Up to the business success, Stating the obvious, salary needs can vary widely it their. Team members may own public or private stock in any of the range ( $ 150k ) correlated! At $ 274,500 above the 150k inflection point, whether the round size is or! Of $ 156,000, with three quarters successfully negotiating a salary ; however, this proportion increases for round between... Reduction Act will provide crucial upgrades to IRS services and personnel, startup Operations startup founders are not to... For the duration that you work and then compute your salary tie your remuneration achievable! A simple example helps 7 % to $ 250,000 Reduction Act will crucial... Get paid reduce your financial stress, both professionally and personally which also has a in. It is to draw a salary in the new revenue and grow their bottom line more analysis. Just started developing your MVP, or is your business said Healy Jones, VP of financial Planning & for! Are three primary drivers for this behavior, said Healy Jones, VP of financial Planning & analysis for startup ceo salary seed round! Investors about salary it believes in uncertainty being a key factor in entrepreneurship and constant! Pressure to not take salaries may start increasing your salary or decide on bonuses and perquisites for yourself is 2019. Your companys long-term financial statements before assessing the amount as well decide on bonuses and for. To be at par with the market standards afford to pay you regularly presence in St. Louis, has Amazon-as-a-service!

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