Startup founder's salary. How much should a founder pay himself?
The company Creandum published a report on the salaries of startup founders. The study was conducted among 650 entrepreneurs from 47 European countries, and the aim was to provide data on the average earnings of founders at various stages of their companies' development.
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Summary
The Creandum report surveyed over 650 entrepreneurs from 47 European countries to study the correlation between startup funding and founders' salaries.
Founders of companies that have received up to one million euros in funding earn an average annual salary of about 50,000 euros, which increases to about 155,000 euros per year for companies that have raised over 50 million euros.
There is a funding threshold of 11 million euros, beyond which salaries stop growing significantly.
The location of the startup in its early stages has little impact on the founders' salaries, but this changes at the first round of funding, with the UK leading in this area.
The industry does not significantly affect the level of salary in the early stages of development, but founders of fintech sector companies begin to lead at the first round of funding, achieving an average salary of 160,000 euros.
There is a wage gap between male and female startup founders, with men earning on average 15 thousand euros more, which decreases with higher funding levels.
Creandum has developed a salary calculator to help founders estimate their average salary based on their business specifics.
The article also discusses the challenges of being a solo founder and the potential benefits of Venture Capital funds for business development.
How much do startup founders earn?
In the Creandum report, an attempt was made to understand whether there is a relationship between the amount of startup funding and the level of their founders' salaries. For this purpose, over 650 entrepreneurs from 47 European countries were surveyed during last year's SLUSH conference.
From their responses, it appears that in companies that have received funding up to one million euros, the average annual salary of a founder is about 50,000 euros. On the other hand, in the case of companies that have raised over 50 million euros, this amount increases to about 155,000 euros per year. However, the report notes that there is a funding threshold beyond which salaries stop growing significantly. It was set at 11 million euros, where the average salary reaches the aforementioned level of 155,000 euros and remains stable - often until the funding exceeds the threshold of 50 million euros.
At the same time, the location of the startup in the early stages of its development has little impact on the founders' salaries. This only changes at the first round of funding. The United Kingdom leads in this area, where founders can expect higher earnings compared to business founders from Baltic and Central and Eastern European countries, where salaries are the lowest. However, the report points to positive growth trends in these regions.
"The founder's salary sets the standard for the entire organization," comments Carl Fritjofsson, managing partner at Creandum.
– A low salary indicates that you are risking everything, and starving on the way to the goal is not a sustainable approach. The founder should earn enough not to worry about money, but not so much as to risk something he is trying to build - he adds.
Fintech takes the lead
Creandum's analysis also showed that in the early stages of development, the industry does not significantly affect the level of salary. The situation changes at the first round of funding, when founders of fintech sector companies begin to lead, achieving an average salary of 160,000 euros. This phenomenon is explained by the intense level of investment in the fintech industry, which in the second quarter of 2022 received a significant sum of investments amounting to 21.5 billion dollars.
The report also points to a wage gap between female and male startup founders. Men can expect salaries higher by an average of 15 thousand euros. This difference only decreases at a higher level of funding.
Creandum also developed a salary calculator, allowing founders to estimate the average salary depending on the specifics of their activity. This tool is designed to help determine the appropriate level of founders' remuneration.
A journalism graduate, closely associated with copywriting for years. Specialist in the field of content marketing. World trends and travel are her inspiration, and she finds balance and harmony in yoga practices. An artist's soul and interior design enthusiast. She particularly likes the modernist style.
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Jakub Rusak
