The Startup CEO Salary. It seems to be an ongoing battle between venture capitalists & their entrepreneurs, since most founders assume the beginning role of CEO.
I’ve asked around quite a bit with venture capitalists as to how much is a good startup CEO salary for Entrepreneurs to be planning for on their financial projections. The best widely agreed upon amount for a startup CEO salary came out to…drum roll…
But That’s Not the Average CEO Salary..
You’re right. It’s not.
To a startup CEO, or a founder planning their financial projections, a common mistake is made here. What happens? You Google Average CEO Salary and up comes MySalary.com estimating an average CEO salary of almost $700,000. You think to yourself “I don’t have CEO experience, so I’ll lower mine to $300,000″. Then you take it to an investor, and he wants to replace you with a different CEO. Or he doesn’t invest in you at all.
Why the Lower Salary
This is a startup, that’s all. We’re Entrepreneurs. Even if you have money for a good startup CEO salary…isn’t that not what us Entrepreneurs are all about? Didn’t we become Entrepreneurs to say no to paychecks? Just because we work for our own company, doesn’t mean we should loose our Entrepreneur spirit. We should continue hanging tough, and staying hungry.
There are two sides to this coin:
1. You should be seeing the product develop. So yes in a sense you really do need to be involved on a daily basis. And yes, you have the right to include a reasonable amount of salary to yourself for this.
2. Your objective is to grow this company, until you can afford to hire that $700,000 CEO. It seems there is alot of controversy on this subject, but one main objective holds true. And that’s keeping the CEO (who, keep in mind, is often the founder during the seed or series A stage) motivated enough to carry the project through.
In other words, if you’re looking for a $300,000-$500,000 startup CEO salary, you’re putting more expenses on the already strapped startup and thus: aren’t looking out for the business. You, at that point, have switched your motivation to your salary.
Why This is a HUGE Concern for Most Venture Capitalists
Why is this such a big concern for venture capitalists and angel investors? Because it’s a very real scenario that happens in a startup: the Founder and CEO (after a year or two of bootstrapping) becomes infatuated with the new CEO salary, and can loose their motivation or no longer feel the need to build a great product.
If You Need More Money, and a Bigger Salary..
Why not reassure your investors you’ll work for it? Try starting off with the base salary of $150,000 plus performance bonuses.
It’s not like us Entrepreneurs to collect a paycheck anyhow so I don’t see why the startup ceo salary has had so much controversy anyway. We enjoy working for it!