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What the numbers say: A recent TechCrunch article recommends that founders take a salary instead of just "working for equity." Startup founder's and CEO salaries can often range from 'none at all' to minimum wages to a certain percentage of the profits. Kruze Consulting estimated earlier this year that startup CEOs paid themselves an average salary of $148,000 at the beginning of 2023. Relevance: Kruze surveyed over 250 startups, which showed that startup CEOs received $150,000 compensation on average in 2022. CEOs at early-stage startups that had raised over $10M in funding were paid $199,000 on average, while startups that raised less than $2M were paid $106,000 on average. Series B stage CEOs were paid between $250,000 and $260,000 on average. In 2022, male CEOs received a $153,000 salary on average, whereas female CEOs earned $133,000. Why it matters: The TechCrunch report adds that the point of raising outside capital is to reduce founders' risk in the firm. By not taking a salary, founders' and CEOs' personal financial issues, such as mortgage payments and rent, may affect their ability to focus on their jobs. Additionally, in venture-backed companies, the founder gives up equity to investors and should be compensated with a salary. If needed, founders and CEOs can link their salaries to performance metrics, such as ARR, to ensure that they earn their pay proportionately to the company's performance. |
