Every time founders raise a funding round, the question becomes “what the hell should I pay myself”. It’s one of those rare things that you can’t really walk up to your board or advisors with. You’ll want to pay yourself a fair wage, but it can be a tricky conversation with the people who have to sign off on your salary before giving you a bump. The start-up accounting firm Kruze Consulting comes updated its annual report on CEO salaries and has some interesting ideas to go with it.
The accounting firm looked at CEO compensation at more than 250 venture capital-backed companies. He found wages were up 2.7% from 2021 – well below national inflation rate. This average represents a 7.9% increase in salaries compared to 2020, when CEO salaries fell due to COVID-19.
The company reports its numbers based on an anonymized dataset that includes more than 250 startups. The company also has a CEO salary calculator that gives a more granular breakdown, where founders can see what their peers earn based on funding stage and industry.
In general, Kruze Consulting has found that startup CEO salaries vary depending on the amount of venture capital/seed funding the companies have raised. As you might expect, lower funding means lower salaries; companies that raised less than $2 million have an average salary of $106,000, while companies that raised more than $10 million pay their top executives nearly $200,000 on average.
“We believe there are three main drivers of this behavior,” said Healy Jones, vice president of financial planning and analysis for Kruze. “First, and obviously, companies with more funding are better able to pay their CEOs. If fundraising doesn’t seem open to startup CEOs, they may choose to maintain their burn rate second, increasing CEO salaries recognizes that these CEOs are more efficient at fundraising, as does increasing CEO compensation in mature companies that generate higher profits. startup culture can generate pressure not to take salaries.For less well-funded tech companies, the concept of “profitability ramen” encourages founders to take no salaries to minimize expenses and make the company more attractive to investors. And, of course, you have well-known founders like Jeff Bezos and Mark Zuckerberg who took little to no pay and focused on businesses. the company’s own capital for their remuneration.
Breaking down the numbers by industry, on average: CEOs of hardware companies are at the bottom of the pack, with an average salary of $112,000 per year. CEOs in biotech and pharma are paid an average of $161,000 – generally because CEOs in these industries tend to be doctors, with higher education and opportunity costs associated with running a business. a startup. E-commerce founders saw a significant increase from a year ago, with an average salary of $141,000 – likely because the industry saw a string of positives, partly due to a decline in the industry from retail and from a customer orientation to online shopping.