Every time founders increase a spherical of finance, the query turns into “what the hell ought to I be paying myself.” It’s a type of uncommon issues you may’t actually go to your board or advisors with. You’ll need to pay your self a good wage, however it may be a difficult dialog with the individuals who must log off in your wage earlier than you give your self a bump. Startup accounting agency Kruze Consulting simply updated its annual CEO salary report and has some attention-grabbing insights to go along with it.
The accounting agency checked out CEO pay at greater than 250 venture-backed firms. It found the salaries are up 2.7% in comparison with 2021 — properly beneath the national inflation rate. That common represents a 7.9% enhance in pay from 2020, when CEO wages took a COVID-19-related nosedive.
The agency experiences its figures primarily based on an anonymized dataset comprising greater than 250 startups. The agency additionally has a CEO wage calculator that offers a extra granular breakdown, the place founders can see what their friends are making primarily based on funding stage and business.
On the whole, Kruze Consulting discovered that startup CEO salaries range by the quantity of enterprise/seed funding that the businesses have raised. As you may count on, decrease funding means decrease wages; firms which have raised lower than $2 million have a mean wage of $106,000, whereas firms which have raised greater than $10 million pay their high execs almost $200,000 on common.
“We really feel there are three main drivers for this habits,” stated Healy Jones, VP of Monetary Planning & Evaluation for Kruze. “Firstly, and most clearly, firms with extra funding are higher in a position to pay their CEOs. If fundraising doesn’t appear open to startup CEOs, they might select to maintain their burn price low by lowering their salaries. Secondly, the elevated CEO salaries acknowledges that these CEOs are simpler at fundraising, very similar to how compensation will increase for CEOs in mature firms producing larger income. Lastly, startup tradition can generate stress to not take salaries. For probably the most lightly-funded tech firms, the idea of ‘ramen profitability’ encourages founders to take no wage to maintain bills minimal and make the corporate extra engaging to traders. And, in fact, you will have well-known founders like Jeff Bezos and Mark Zuckerberg who took little or no pay and targeted on firm fairness for his or her compensation.”
Breaking the numbers down by business, on common: {Hardware} firm CEOs are close to the underside of the pack, with a mean wage of $112,000 per yr. Biotech and pharma CEOs are paid a mean of $161,000 — sometimes as a result of CEOs in these industries are typically medical medical doctors, with greater schooling and alternative prices related to working a startup. E-commerce founders noticed a major enhance over final yr, with a mean wage of $141,000 — presumably as a result of the sector has seen a fantastic run of profitable outcomes, partially resulting from a downtick within the retail sector and a buyer focus towards shopping for on-line.
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