Investor Peter Thiel said he believes a startup CEO's salary is "incredibly predictive" to the success of a young business. Overly inflated executive compensation can set the wrong tone and culture for a startup. It's a signal of motivation and whether the CEO "believes in what they're doing," Thiel said.
So what's an appropriate salary for a startup CEO? Under $150,000, "even post-Series A," according to Thiel.
Actual CEO salaries can vary widely, according to new data from startup accounting and consulting firm Kruze Consulting, and can depend on factors such as how much funding a company has raised and whether the founder is a man or woman.
The average startup CEO salary in 2024 is $141,000, down slightly from $142,000 in 2023, according to Kruze, which looked at payroll data from more than 450 startups.
CEOs, on average, earn the smallest salary at the seed stage and see increases as they raise subsequent rounds of funding. Seed-stage startup CEOs make an average of $132,000 in 2024, which is up 2.3% from last year's $129,000.
At the Series A level, average CEO salaries rose 6.5% — from $168,000 in 2023 to $179,000 this year.
It's a different story for Series B CEOs, however, who are feeling the overall venture downturn the hardest. Their salaries are down 9.6%, falling from $251,000 last year to $227,000 in 2024.
Some startup investors and other industry leaders believe founders should take a far-below-market rate, or sometimes no salary at all, said Healy Jones, the vice president of financial planning and analysis for Kruze. This so-called "ramen" theory of CEO compensation, where founders live as frugally as possible as their company survives on early funding rounds, should be avoided, Jones said.
"Founders should pay themselves something," he said. "If you are raising outside funding, you are working for somebody else, to a certain extent ... You should pay yourself the right amount so you don't have to work for Uber and get divorced over this."
Founders alone typically don't set their own salary. It's a conversation between the founder and their board and investors, Jones said, and usually involves a financial model to settle on a number that makes sense for the business.
In 2024, just 5% of startup CEOs took a salary of $0, according to Kruze, which is down from 8% in 2023. In most cases, a startup CEO's decision to forgo a salary is the result of the business experiencing hardships, and the founder doing everything they can to extend runway, Jones said. It's why average CEO salary has seen a slight dip overall, and a heavier decrease at the Series B level, given that stage of startups has struggled in the past couple years as funding has become more scarce.
This year, 5% of startup CEOs took zero salary, compared to 8% last year, Kruze said. On the other end of the spectrum, 2% of startup CEOs had a salary at $300,000 or higher in 2024. In 2023, 5% of CEOs took such a salary.
Kruze's data also shows a pay gap persists between male and female startup CEOs. This year, female CEOs are earning an average of $14,000 less than their male counterparts, the same gap female CEOs faced in 2023. Women CEOs took an especially large hit to their compensation during the pandemic, according to Kruze, as their salary dipped to $101,000, a $45,000 gap compared to their male counterparts.
Closing the gender pay gap is one area venture capitalists can play an important role, Jones said, as they have insight into the compensation rates of executives across their portfolio.
"If I was a venture capitalist with a decent-size portfolio and I cared about this, I would look at the salaries across my portfolio and try to make sure that there was nothing weird happening in there," Jones said. "If (female CEOs) were paying themselves less, I would approach them and say, 'You need to increase your salary.'"
