CEO and Founder of Kruze Consulting
Table of contents
The average startup founder’s salary in 2023 was down to approximately $145,000 from $150,000 in 2022. This is slightly higher than the average startup CEO salary of $142,000 in 2023, driven by technical founders who earn more than their CEO counterparts.
Startup founders reduced their pay in 2023 to extend their companies’ runways because: 1) A diminished funding landscape leading to fewer late-stage investment rounds, which traditionally result in increased founder compensation; 2) A desire to maintain their companies’ viability and extend the timeframe before they run out of cash or grow into a higher valuation; 3) More modest initial seed-funding rounds, which in turn leaves less available money to boost compensation.
Use our calculator below to estimate comp at an early-stage startup based on the company’s industry, funding raised etc. Note that companies that our data - and the calculator below - show that companies that have raised capital in the past 6 months tend to pay higher this year. Our assumption is that this is because recently raised startups have overcome the hurdle of the difficult funding environment, whereas a startup that hasn’t raised recently is more likely to be in runway extension mode.
Use this calculator to estimate the range in pay that founders can expect, in the US, based on the amount of venture capital raised, stage of the company and industry.
This isn’t a survey - it’s a study conducted on payroll data from over 400 VC/seed backed startups, all based in the United States. These companies have collectively raised over $5.5 billion in financing from leading VCs and early-stage investors. They range from seed/pre-seed backed companies to Series C.
Non-CEO founders tend to make a higher salary vs. CEO founders: ~$155,000 for non-CEO founders vs. $142,000 for CEOs. About 75% of the founders included in this compensation study are CEOs. The rest are a variety of roles, from technical positions like CTO, to head of product, to COO. Technical positions - especially CTOs or PhDs or doctors, account for this higher average. Other than sales roles, it’s not uncommon for the highest paid positions at a startup to be the CTO/head of medical research. We also publish a startup CEO salary guide that has been updated for 2023.
It’s typical for startup founders to earn higher salaries as they secure funding in the later stages. This trend is pretty logical - as the startup matures and moves to the later stages, it becomes less risky, thereby justifying enhanced compensation for the founders. Basically, moving them closer to what market comp would be at a large company. Additionally, with growth, the company should have more assets, including not only cash from investors but ideally, a steady stream of revenue as well.
We are sharing prior year’s data below:
In the US tech startups that have raised money tend to pay their founder CEOs about
$130,000 $150,000 per year (updated for 2022 data). My firm runs payroll, accounting, etc. for funded startups (seed and venture stages), and we annually conduct a study of startup CEO salary. Our most recent study looked at CEO and founder pay at over 250 funded startups.
In addition, for 2022 we also analyzed the data for chief technology officers (CTOs), to determine startup CTO salaries in early-stage companies.
In 2022, the average startup founder at a funded startup makes about $150,000 - while the median founder makes closer to $140,000 per year. However, founder compensation varies by the amount of capital that a startup has raised. Below is a breakdown of founder salary by funding raised:
Our data shows that founder CEOs tend to make about the same as non-CEO founders at VC backed startups, although this may start to diverge after a company has raised tens of millions in funding. At that point, the CEO often makes more money than most other founders (except sales founders!). Additionally, later-stage companies are more likely to replace their founder-CEO with a “hired gun” CEO, and these outsiders tend to make quite a bit more than a founder would.
Startup founders tend to make higher salary as the startup raises later stages of funding. This makes sense - as a company becomes later stage, it is not only de-risked (and can therefore afford higher founder compensation), but also should have more resources - both cash from investors and hopefully revenue.
We used to recommend seed stage founders pay themselves about $119,000, but over the past few years that has increased to about $130,000.
CEO pay varies by a number of factors, including the executives previous experience, the amount the company has raised, the startup’s traction and the industry the startup is in. As we looked across different industries, our data showed that CEOs in different industries have higher average salaries than others. For example, salaries in Biotech tend to average more than those in other industries. Founders in biotech tend to come with academic credentials, and previous experience, that founders in other industries don’t always have (M.D., PHD), and thus warrant a higher annual salary.
So to answer the most obvious question:
Founders of VC-backed startups pay is influenced by the amount of funding that the company has raised, the founder’s role in the company and the company’s industry. Pay ranges from $0 (zero!) to over $300,000, with the average founders pay in 2022 being $150,000. Note that the owners of LLCs should consult a tax CPA - there are particular tax strategies about when to take an S-Corp election and begin drawing owner’s salaries that are unique to LLCs. Our information is for Delaware C-Corporations that are raising outside capital only!
Compensation varies by role, although not by as much as you’d expect. At the earliest stages, technical founders (in the CTO role) tend to be paid more than their CEO founder counterparts. This is likely because experienced engineers are difficult to hire, whereas anyone can be the chief executive officer of a startup that they found. At revenue generating startups, it’s the sales leader who is often the highest paid. See our video below about this, and why it’s totally normal.
So a CEO founder makes about $150,000.
It’s often the sales leader! Many times these professionals have some of the lowest base salaries in the whole company - or at least on the low end of the spectrum. BUT, there is a method to the madness - they should earn more in commission than they get in salary. And so a true, sales-founder will ask for a low salary with high upside on the sales commissions. And this often makes them the highest paid person at the company.
In my experience, investors in seed funded startups tend to want the founders to take enough salary to not have to stress too much about making rent payments or buying food - the goal is to be able to completely devote your time to growing the company. Experienced investors also know what is typical for your type of startup, and expect you to have pay inline with similar companies. Founder pay is something that you can and should discuss with your investors prior to the investment so that there is no discord post-funding. One way to show your investors what you expect to earn as a founder/CEO is through a detailed financial model that outlines the various ways that you will use the investor’s capital. If you disclose your expected pay in a model, and if it is a reasonable amount, then you shouldn’t have any problems.
In Silicon Valley, it is normal for startup founders to pay themselves a salary after they’ve raised funding. Seed funded founders usually pay themselves a modest about; our data says $130,000 per year. Later stage founders may pay themselves several multiples of that. The amount of pay will vary by the stage of the company, the amount of venture or seed funding raised, the founder’s experience and title and the startup’s industry.
Use our pay calculator to get an estimate based on your industry, funding raised, etc. However, roughly, founders make:
Our original data from 2018 showed that the average CEO pay for a funded company is $130,000 per year - and other founders, such as technical, operations or sales founders, tended to take the same as the CEO.
Pay does often go up as funding raised goes up. Roughly, for every additional $1,000,000 raised, a startup CEO (and other founders) will take home between $4,000 and $5,000 more in annual salary.
We work with a lot of investors, and many of them share a similar founder pay philosophy: 1) take enough salary to not have to worry about meeting rent - don’t get distracted growing the business because you can’t afford to live! 2) take a “normal” amount of cash compensation, as in, an amount that isn’t wildly more or less than what similar companies pay their founder executives.
To help you understand more about what’s “normal” pay, here is another dataset from my company’s analysis. We’ve got more info on our blog as well, in case you are interested.
Categories:Venture Capital Startup Finance
Top viewed questions
READY TO CONNECT FOR A FREE CONSULTATION?
We are the experts at helping seed/VC-backed Delaware C-Corps with their accounting and finances!
Talk with a real accountant, not a generic salesperson!
Help us get in touch
Your request has been submitted.
We will contact you shortly.