Each time founders increase a spherical of finance, the query turns into “what the hell ought to I be paying myself.” It’s a kind of uncommon issues you may’t actually go to your board or advisors with. You’ll wish to pay your self a good wage, however it may be a difficult dialog with the individuals who have to log out 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 corporations. It found the salaries are up 2.7% in comparison with 2021 — nicely 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 trade.
Generally, Kruze Consulting discovered that startup CEO salaries fluctuate by the quantity of enterprise/seed funding that the businesses have raised. As you would possibly count on, decrease funding means decrease wages; corporations which have raised lower than $2 million have a median wage of $106,000, whereas corporations which have raised greater than $10 million pay their prime execs almost $200,000 on common.
“We really feel there are three main drivers for this conduct,” stated Healy Jones, VP of Monetary Planning & Evaluation for Kruze. “Firstly, and most clearly, corporations with extra funding are higher capable of pay their CEOs. If fundraising doesn’t appear open to startup CEOs, they could select to maintain their burn fee low by decreasing their salaries. Secondly, the elevated CEO salaries acknowledges that these CEOs are more practical at fundraising, very similar to how compensation will increase for CEOs in mature corporations producing better income. Lastly, startup tradition can generate stress to not take salaries. For essentially the most lightly-funded tech corporations, the idea of ‘ramen profitability’ encourages founders to take no wage to maintain bills minimal and make the corporate extra engaging to buyers. And, in fact, you’ve got well-known founders like Jeff Bezos and Mark Zuckerberg who took little or no pay and centered on firm fairness for his or her compensation.”
Breaking the numbers down by trade, on common: {Hardware} firm CEOs are close to the underside of the pack, with a median wage of $112,000 per yr. Biotech and pharma CEOs are paid a median of $161,000 — sometimes as a result of CEOs in these industries are usually medical medical doctors, with greater training and alternative prices related to operating a startup. E-commerce founders noticed a major enhance over final yr, with a median wage of $141,000 — presumably as a result of the sector has seen an incredible run of profitable outcomes, partially attributable to a downtick within the retail sector and a buyer focus towards shopping for on-line.
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