Startup CEO salaries vary by the amount of venture/seed funding that the companies have raised…reports Asian Lite News
The average startup CEO salary increased by 2.7 per cent in 2022 to reach $150,000 per annum globally from last year, while the median increased to $140,000, according to a new report.
According to startup accounting firm Kruze Consulting, in 2022, chief executives at early-stage companies that have raised over $10 million in financing were paid just $199,000.
“Founder CEOs at companies that have raised under $2 million were paid $106,000 on average — a difference of over $90,000,” the report mentioned.
Startup CEO salaries vary by the amount of venture/seed funding that the companies have raised.
The accounting firm looked at data from over 250 seed and VC-backed startups.
It found that average represents a 7.9 per cent increase in pay from 2020, when CEO wages went down owing to the Covid-19 pandemic.
Companies that raised over $5 million and over $10 million in funding saw their CEO pay go up by 7.5 per cent and 13 per cent, respectively.
“However, startups with more limited funding saw their CEOs make less, by about 7 per cent, than in 2021,” the report mentioned.
The report found three primary drivers for this behaviour.
“Firstly, and most obviously, companies with more funding are better able to pay their CEOs. Secondly, the increased CEO salaries recognises that these CEOs are more effective at fundraising, much like how compensation increases for CEOs in mature companies that generate greater profits,” said Healy Jones, VP of Financial Planning & Analysis for Kruze.
“Finally, startup culture can generate pressure to not take salaries,” Jones added.
Biotech and pharmaceutical companies tend to have the highest CEO compensation, with seed funded companies paying their CEOs nearly $161,000.
Healthcare companies had lower founder/CEO pay.
“We realised that this is because of the rise of D2C healthcare companies, which tend to seem more like SaaS businesses and less like a healthcare company with a CEO who has an advanced degree,” the report mentioned.
During Covid, the average startup CEO salary dipped 2 per cent to $139,000, but bounced back to $146,000 at the beginning of 2021.