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Entrepreneurs: How much does a startup CEO earn?

The first rule of start-ups: to pay yourself, you need to be profitable (which is rarely the case at the beginning) or have raised funds. In short, it’s hard to pay yourself early on!

So, founding teams often split up when this goes on for too long.

As soon as the start-up has raised enough funds, the CEO begins to pay themselves (in agreement with their investors).

Ultimately, the better the CEO is at fundraising, the more they can pay themselves!

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How do start-up CEOs pay themselves?

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According to the latest studies (Glassdoor France, Galion, etc.), the annual fixed salaries of French start-up CEOs range between €70k and €120k when the start-up has raised less than €5M. In the US, the average is between $100k and $160k for a raise of less than $5M.

For a €50M raise in France, the CEO's annual fixed salary averages €150k (compared to a minimum of $400k for a US start-up).

A CEO's fixed salary is only one part of their total compensation. It just serves to cover their monthly personal expenses. They can supplement this with variable pay, stock options (BSPCE), and other benefits.

But the bulk of the earnings will come from capital gains on the sale of shares.

In the meantime, they can also do a cash-out during a funding round to free up some cash.

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What does a CEO's salary depend on?

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The CEO is not necessarily the highest-paid person in the company.

Some CEOs actually pay themselves very little, thereby putting pressure on profitability and salary levels within their company. Jeff Bezos and Mark Zuckerberg, for example, took little or no salary at the beginning.

A CEO's salary naturally depends on several factors (start-up maturity/funds raised; profitability; number of employees; industry; geographic location; CEO's age/experience; and the overall package including stock options and other benefits).

Some biotech/pharma CEOs may earn more because they are often doctors or highly qualified...

Unfortunately, female CEOs are still paid 25% to 30% less than men, and this is also the case in the US.

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In conclusion

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Launching a start-up is very demanding. The CEO should therefore have a "market" salary if the company can afford it! Not paying yourself properly can lead to more stress and affect your personal life.

So, don't forget to discuss salary before signing your term sheet!

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The real question to ask, given the economic climate: will young graduates continue to launch businesses as much as they have in recent years, or will they prefer the (apparent) security of a salaried job?

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Are you trying to start your own business? And do you need more advice? At Super Capital we can advise and support you.