Kruze Consulting works with a wide range of funded startups, and we’re frequently asked about salary ranges for early-stage companies, including chief technology officers (CTOs). We produce an annual report on startup CEO salaries, and this year we’re adding CTO pay to our analysis. We’ve reviewed salary data from over 200 seed and venture-funded startups to determine the average annual paycheck earned by chief technology officers. We’ve also positioned them against average CEO salaries to provide a more comprehensive picture of startup salaries.
CTO salaries increase by funding stage
It’s to be expected that salaries increase as a startup accumulates more capital, and our research confirms that. A somewhat non-intuitive datapoint also emerged – CTO paychecks on average are larger than those of CEOs in the seed stage.
Average CTO and CEO salaries by funding stage:
This suggests that CTOs are in demand and startups need to pay more, at least initially, to attract top talent. Highly technical engineers and engineering leaders have many career opportunities. Generally speaking, the best engineers can get high salaries elsewhere – with entry level positions at top tech companies like Google and Facebook paying $150,000 a year or more, and highly-experienced professionals making several times that.
Startups need to compete against these high salaries and equity compensation. So higher salaries are warranted for technology officers at the seed stage to offset the potential opportunity cost of working for a new company with no track record, as opposed to a position with an established business, even if founding and early-stage technical leads receive high equity compensation.
Successfully raising subsequent funding rounds indicates that the company is hitting its milestones and achieving its goals. At that point the CEO’s compensation begins to increase and exceeds the CTO’s salary.
Seed-stage CTO pay varies by industry
Technology officers’ salaries differ significantly by industry. Reasons for the variation may include the specific technical, experience, and educational requirements for that particular industry.
Average CTO salaries by industry (seed only):
|Software / SaaS||$141,000||$123,000|
Healthcare, a highly regulated industry, offers the highest average startup compensation for chief technology officers, which probably reflects the experience necessary to navigate the legal and regulatory requirements for that sector, as well as the technical knowledge required. It is also possible that healthcare requires a higher salary vs. a more traditional “software/hardware” company that may organically appeal to more technical founders. Other industries with significant technology requirements like software/SaaS and eCommerce also pay technology officers more on average.
On average, startup CTO salaries are roughly comparable to Chief Executive Officer salaries
The majority of technology and engineering officers earn the same salaries as CEOs. This may reflect the fact that many CTOs are co-founders, and therefore earn similar salaries to the CEOs.
CTO salaries as percent of CEO Salaries:
One piece of evidence that supports this conclusion is that non-founding CTOs make ~$50k to $60k more than founding CTOs at the seed and Series A stages - this gap shrinks to $35k at Series B. The decrease in the pay gap is likely due to 1) the CEO’s pay increasing to the point where it’s closer to market for a highly-compensated engineer; and 2) decreasing risk of the company’s failure at the later stage means that a non-founder joining takes on lower theoretical risk vs. joining a big company. Non-founding chief technology officers have a smaller equity stake in the startup, and would be more likely to negotiate for a salary closer to market levels.
What does a startup CTO do?
Startup chief technology officers are typically much more hands-on than their counterparts in an established large company. Both participate in strategic decisions and company direction, but startup technology and engineering directors have to be willing to get their hands dirty, getting involved in routine work, and taking on different tasks to fill in gaps in their teams. A startup CTO leverages technology to help build the product, and supervises the engineering team and any outsourced or freelance development staff. But the daily duties of a technology leader can differ widely based on the business itself and the stage of the startup.
While the responsibilities of individual CTOs vary, common traits include:
- Knowledge of technologies. A technology leader needs to identify both existing and emerging technology that is a good fit for the startup.
- Background in development. CTOs usually have a good grasp of software development, programming, and system architecture, to help them lead other developers and handle the startup’s technical challenges.
- Managerial experience. While technology executives often pitch in with work in the company’s early stages, as the startup grows, the CTO will shift to a more managerial role. A strong network is important in this role, to help identify, attract, and hire to fill certain roles. The technology leader also needs to evaluate performance and take action if necessary.
- Project management skills. The product development process is complex and multi-layered. A startup technology director needs to manage multiple projects, be highly organized, and communicate effectively with the development team, management, investors, and other stakeholders.
- Ability to encourage positive work environments. Talented developers and engineers can be difficult to find and often are regularly headhunted. A technology and engineering leader needs to promote a positive and rewarding work experience to encourage developers to both stay with the startup and produce their best work.
Experience with startups is a plus
Being a startup CTO is very different than the same position in a more corporate setting with an established company. Startups are less bureaucratic, faster-paced, and more dynamic than large corporations, and having experience with the startup environment is a big asset for an early-stage CTO.