What Salaries Do Startup Founders Pay Themselves?
Eric Nakagawa stashed this in startups
Want to be called CEO/founder? Think you'll suddenly make a ton of money? Probably not gonna happen.
Avg. founder salary
<$500k funding - $35.5k
$500k-$1M - $38.2k
$1M-$5M - $45.7k
$5M-$10M - $62,150
The majority of compensation comes via the equity you hold. But for first time founders you will be eating a lot of ramen and pinching pennies. There is a small chance that you'll be able to raise enough to pay yourself more than the numbers above, but that is exceedingly rare.
While running simplehoney I took no salary for almost 2 years. Eventually went on payroll at minimum wage so our company could qualify for a group health insurance. I brought home $7495.27 in salary for 2012.
#protip it's not about the money
Sounds about right. Sadly.
What's amazing is that it's legal for Eric to have paid himself only $7500 in 2012 -- way way way below minimum wage.
why is that?
Actually my 2012 salary was a bit misleading, because I joined payroll near the end of the year. I was making the federal minimum wage @ minimum # of hrs per week, so had I been paid for the entire year (assuming 2080 hrs @ 7.50) it would have been more like $15,600.My main point is that I didn't take a salary because we only raised seed, and were pre-revenue, pre-PMF.I've heard some founder peers who (in 2010) were taking in 80-90k while they were pre-rev, but post-mpv, and pre-series-a.
I think you can get away with paying yourself under the minimum wage because it's not worth it to them to come after you for cheating yourself.
I know plenty of founders who take 90k -- or even more -- pre Series A. As long as they don't run out of money and they're not paying themselves ridiculously high, there's no hard set limit.
The reason most founder salaries are so low is as Eric said -- startups in survival mode need to stretch every dollar to last as long as possible!
While the seed and Series A numbers seem right, I have a hard time believing the numbers at the higher end of the spectrum. I can't imagine that $80K is the correct average for >$10M raised.
At >10M I would factor in at least one funding event where the founders take money off the table. If that were true, then the lower salary seems justified.
Sure, Eric. I would agree with that, but that distorts the intent of the article (and likely, Peter Thiel's point). I think it's fair to suggest that Founder comp is inline with the general market once past Series A (or arguably at Series A).