The lower the CEO salary, the more likely a startup is to succeed

According to The Next Web the founders of successful startups pay themselves very modest wages.

The data comes from a new tool called COMPASS from the people behind the STARTUP GENOME PROJECT. It can be set up to pull in data automatically from the likes of Google Analytics, Salesforce, MailchimpQuickbooks, Mixpanel, PayPal and Stripe, and it also accepts directly input data too. This information is used to generate a dashboard that shows startup CEOs how they’re faring against similar companies with regard to revenue growth, customer growth and customer lifetime value.

For many would-be entrepreneurs, raising money is the ultimate goal. With a $500,000 seed round, some fledgling CEOs expect a 6-figure salary as a kind of payback for success at raising capital. Most investors will see this as a sign of immaturity or as an indicator of someone trying to build a lifestyle business. Either way this will send most investors packing.

With the exception of India, the salary ranges for startup founders around the world are remarkably similar. Low founder pay is a particularly striking factor in Silicon Valley, when you consider the high cost of living in cities like San Francisco.

Does the stage that a startup is at affect its founders’ salaries? Not as much as you might think. Founders tend to keep their salaries below $45,000 per year until they hit a high-growth product phase. Even then, the average salary for a startup with a mature product is $70,109…

Of course founders should be looking at winning big on exit…if they are looking to align their interests with their investors’.

Published by Rob Farrow

accountant, entrepreneur, former chef, occasional artist, angel investor, business advisor, corporate tax specialist