Navigating founder compensation remains one of the most challenging aspects of building a startup. Finding the right balance between personal financial needs and company growth objectives requires careful consideration of multiple factors. Startup CEO salaries are experiencing a significant upswing in 2025, reversing the downward trend observed over the previous two years.

How Much Are Founders Earning in 2025?

The startup compensation landscape has shifted dramatically this year, with founder salaries increasing by more than 14%. According to comprehensive data from Kruze Consulting's annual Startup CEO Salary Report, the average salary jumped from $141,000 in 2024 to $161,000 in 2025. This positive development aligns with an improved fundraising climate, as PitchBook projects U.S. venture fundraising to reach $90-110 billion this year, up substantially from $71 billion in 2024.

Unlike many compensation reports based on self-reported surveys, Kruze's analysis draws from anonymized payroll data from over 450 startups across various sectors including SaaS, biotech, fintech, and AI. This methodology provides a more objective and reliable view of executive compensation trends in venture-backed startups. The report serves a crucial purpose for founders navigating the fundraising process, helping them understand appropriate compensation levels and incorporate realistic figures into their financial models.

Discussing salary expectations with venture capitalists can be challenging for founders, as investors often provide limited guidance on what constitutes "reasonable" compensation. This data-driven approach fills this information gap, offering founders concrete insights to determine fair compensation as their companies grow. As startups progress through funding stages, founder compensation typically increases, reflecting greater access to capital and reduced risk profiles.

Breaking Down Compensation by Funding Stage

Founder salaries follow a predictable pattern, increasing as companies secure additional capital. For 2025, seed-stage founders earn an average of $147,000 annually, while Series A founders command approximately $203,000. By Series B, the average founder salary rises to $214,000, reflecting both the reduced risk profile and increased access to capital.

These averages mask significant variations based on several factors, particularly the founder's role within the organization. Technical and product-focused founders often earn more than their CEO counterparts, especially in early-stage companies. For seed-stage companies, the role-based salary breakdown reveals interesting patterns: CEOs average $132,000, CTOs $134,000, COOs $135,000, Presidents $92,000, and product leaders (CPOs) top the list at $149,000.

The gender pay gap continues to persist in startup founder compensation, though it has narrowed slightly in recent years. Female CEO salaries increased by 17.8% compared to a 13.9% rise for male counterparts, reducing the absolute gap from $14,000 in 2024 to $11,000 in 2025. This improvement marks significant progress from 2020, when the gender compensation gap peaked at $45,000, suggesting that transparency in compensation information appears to be a key factor in addressing these disparities.

What Factors Influence Founder Salary Decisions?

Multiple variables impact appropriate founder compensation levels, creating a complex decision matrix. Understanding these factors helps founders navigate salary discussions with co-founders, employees, and investors more effectively.

Industry and Specialization Impact

The industry in which a startup operates significantly impacts founder compensation levels. Biotech founders tend to earn higher salaries, averaging 15-20% more than their counterparts in other sectors due to specialized expertise (often MD or PhD credentials) and longer development cycles typical in healthcare startups.

Similarly, fintech founders command higher-than-average salaries, while consumer-facing startup founders typically earn less. AI and deep tech founders with specialized technical backgrounds often command premium compensation, reflecting the competitive market for their expertise. Founders with unique domain knowledge or technical skills that would be difficult to replace can generally justify higher compensation levels to investors and boards.

The maturity of the industry also plays a role, with founders in emerging sectors often taking lower initial salaries in exchange for greater equity upside. Founders should research industry-specific benchmarks when determining appropriate compensation rather than relying solely on general startup salary data.

Geographic Location Considerations

Geographic location plays an equally important role in determining appropriate founder compensation. Founders in the San Francisco Bay Area and New York City consistently report the highest salaries, with Boston following closely behind. According to recent data, Boston-based founders earn median salaries of $150,000, followed by Midwest founders at $145,000, New York at $138,000, San Francisco at $135,000, and Texas at $119,000.

These variations largely mirror the cost of living differences across regions, with housing costs being a primary driver. Remote work trends have somewhat flattened these geographic differences, but location still remains a significant factor in compensation decisions. Founders should consider local market rates when determining appropriate salaries, especially when recruiting team members who might compare their compensation to the founder's.

Regional investor expectations also vary, with coastal VCs typically more comfortable with higher founder salaries than investors in lower-cost regions. This geographic factor becomes particularly important for founders raising capital from investors outside their local ecosystem.

Personal Financial Circumstances

Personal circumstances significantly influence founder salary decisions, creating unique considerations for each individual. Founders with mortgages, families, or other substantial financial obligations often need higher salaries than those with fewer commitments.

The founder's age and career stage also matter-mid-career professionals who leave established positions to launch startups typically require higher compensation than founders straight out of college. Previous salary history creates an anchor point that influences expectations, though most founders should prepare for some reduction from their corporate compensation packages.

Founders should consider these personal factors when determining appropriate compensation:

• Essential living expenses: Housing, food, healthcare, and family obligations
• Debt obligations: Student loans, mortgages, and other financial commitments
• Financial runway: Personal savings that can supplement lower initial salaries
• Risk tolerance: Individual comfort with financial uncertainty
• Lifestyle flexibility: Willingness to reduce discretionary spending

Finding the Right Balance for Your Startup

Determining appropriate founder compensation requires a strategic approach that many experts refer to as "the Goldilocks method"-not too high, not too low, but just right. This approach acknowledges that founder salary decisions involve balancing multiple competing priorities: personal financial needs, business requirements, investor expectations, and long-term incentive alignment.

Risks of Underpaying Yourself

Setting compensation too low creates significant risks for both founders and their startups. Founders struggling with personal financial stress often make poorer business decisions and may experience burnout that harms the company's prospects.

Additionally, extremely low founder salaries can send concerning signals to potential hires and investors about the company's financial health or future prospects. According to research, founders who consistently underpay themselves may even undervalue their company's products and services, creating long-term pricing challenges.

Financial stress can lead to short-term decision making that prioritizes immediate cash flow over strategic growth opportunities. This might manifest as taking on less optimal clients, discounting products, or making compromises that damage long-term value. Founders should recognize that severe personal financial pressure rarely leads to optimal business outcomes.

Dangers of Excessive Compensation

Conversely, excessive compensation presents its own problems for startup founders. High founder salaries accelerate cash burn, potentially shortening the company's runway and forcing earlier fundraising rounds under less favorable terms.

They can also create tensions with employees and investors who may question whether the founder is prioritizing personal gain over company growth. Peter Thiel, successful entrepreneur and investor, famously stated that "the lower the CEO salary, the more likely it is to succeed," highlighting how salary caps can create a culture of efficiency.

Excessive salaries may signal misalignment between founder and investor interests, potentially complicating future fundraising efforts. Investors typically expect founders to prioritize equity appreciation over current salary, demonstrating confidence in the company's long-term value creation.

Creating a Sustainable Approach

The optimal approach involves determining the minimum salary needed to alleviate financial stress while maximizing resources available for company growth. For most founders, this means taking enough to cover essential living expenses plus a modest buffer, while leaving enough capital to achieve key milestones before the next funding round.

Consider these practical steps when determining your founder salary:

1. Create a detailed personal budget identifying essential expenses
2. Calculate your company's burn rate and runway with different salary scenarios
3. Research industry and stage-appropriate compensation benchmarks
4. Discuss expectations openly with co-founders and investors
5. Build in regular compensation reviews tied to company milestones

How Do Investors View Founder Compensation?

Venture capitalists and angel investors hold significant influence over founder compensation decisions, especially after initial funding rounds. Understanding investor perspectives helps founders navigate these discussions more effectively.

Investor Expectations by Funding Stage

Contrary to popular belief, most experienced investors don't expect founders to work for free or subsist on minimal salaries indefinitely. Rather, they recognize that reasonable compensation is essential for founders to focus entirely on building their companies without financial distractions.

Fred Wilson, a prominent venture capitalist, articulates the balanced perspective many investors share: "Founders should make enough to not worry about paying rent but not so much that they're financially independent of the success of their company." This approach acknowledges that extreme financial stress can harm a founder's performance while ensuring their primary financial upside remains tied to equity.

Investors typically expect founder salaries to align with company stage and fundraising status. At pre-seed or angel rounds, investors generally accept modest salaries of $40,000-$75,000. By Series A, salaries of $100,000-$175,000 become standard, gradually increasing with subsequent rounds.

Governance and Approval Processes

The board of directors, which typically includes investor representatives after funding rounds, plays a formal role in approving founder compensation. This provides a mechanism for investors to influence salary levels as the company evolves.

When preparing for fundraising, founders should include realistic compensation figures in their financial models and be prepared to discuss their reasoning with potential investors. Transparency about compensation philosophy demonstrates maturity and thoughtfulness that investors appreciate.

Most venture capital term sheets include provisions regarding founder salaries, either specifying exact amounts or requiring board approval for changes. These provisions protect investor interests while providing a framework for compensation discussions as the company grows.

Alternative Compensation Strategies for Founders

Beyond traditional salaries, startup founders employ various compensation strategies to balance personal financial needs with company requirements. These alternative approaches can provide flexibility while conserving cash during critical growth phases.

Equity-Based Approaches

Equity-based compensation remains the primary wealth-creation vehicle for most founders. While founders typically start with significant equity positions (20-30% for solo founders, less for co-founding teams), vesting schedules ensure ongoing alignment with company success.

The standard four-year vesting period with a one-year cliff protects both the company and co-founders in case someone departs early. Some founders opt for lower salaries in exchange for additional equity retention, especially when they believe strongly in their company's future value.

Founder secondaries-selling a small portion of equity in later funding rounds-have become increasingly common, allowing founders to realize some financial gain before an exit. While once controversial, investors now often support modest secondaries after Series A to alleviate financial pressure on founders.

Creative Cash Compensation Methods

Deferred compensation offers another approach, particularly for early-stage startups with limited cash. Under this arrangement, founders accrue salary on the company's books but postpone actual payment until specific milestones or funding events.

Performance-based bonuses provide a way to align founder compensation with company success. Milestone-based triggers-like reaching revenue targets, completing funding rounds, or launching products-can unlock additional compensation without requiring high fixed salaries.

For profitable companies, especially those not seeking venture funding, profit distributions offer a flexible compensation mechanism that scales with business performance. These approaches allow founders to:

• Conserve cash: Preserve runway during critical growth phases
• Align incentives: Link compensation directly to company performance
• Demonstrate commitment: Show investors your focus on long-term value
• Maintain flexibility: Adjust compensation as company circumstances change

Practical Steps to Determine Your Ideal Salary

Determining appropriate founder compensation requires a methodical approach that balances multiple factors. A practical framework helps founders navigate this complex decision more effectively.

Assess Your Company's Financial Position

Start by creating a detailed cash flow projection for your startup. Calculate your burn rate, runway, and identify when you'll need additional funding based on different salary scenarios.

Be realistic about revenue projections and remember that salaries represent a significant portion of most startups' expenses. Include employer-side payroll taxes in your calculations-these typically add 7-11% to the stated salary cost.

Consider how different salary levels impact key milestones and fundraising timelines. This analysis helps quantify the trade-offs between personal compensation and company runway, providing objective data for decision-making.

Evaluate Personal Financial Requirements

Next, evaluate your personal financial needs objectively by creating a comprehensive budget. Cover essential living expenses-housing, food, healthcare, debt payments, and family obligations-while adding a modest buffer for unexpected costs.

Be prepared to reduce discretionary spending, especially if transitioning from a high-paying corporate role. Remember that founder compensation includes both salary and equity, with the latter representing your primary financial upside.

Consider your personal financial runway-savings that can supplement a lower initial salary during the earliest stages. This personal cushion can provide flexibility during the critical early months when conserving company cash is most important.

Research Relevant Benchmarks

Investigate industry benchmarks for your specific situation, considering your company's stage, location, industry, and funding status. These benchmarks provide general guidelines rather than rigid rules, offering context for your decision.

For technical founders in specialized fields like AI or biotechnology, slightly higher compensation might be justified due to market demand for your expertise. Similarly, founders in high-cost locations may need to adjust benchmarks to reflect local living expenses.

Discuss compensation openly with co-founders and early investors to ensure alignment. If co-founders have different financial situations, consider whether varied compensation structures make sense while ensuring everyone feels fairly treated.

Evolving Your Compensation Strategy for Growth

Creating a sustainable, scalable approach to founder compensation requires thinking beyond immediate salary needs. As your startup evolves, your compensation strategy should adapt accordingly, balancing short-term requirements with long-term incentives and company growth objectives.

Planning for Multiple Stages

Develop a multi-year compensation framework that aligns with your company's projected growth and funding milestones. Rather than making ad hoc salary decisions, outline expected compensation progression tied to specific achievements-revenue thresholds, funding rounds, profitability goals, or team size benchmarks.

This provides transparency for you, co-founders, and investors while creating predictability for company financial planning. A staged approach demonstrates thoughtfulness about both personal needs and company resources, impressing investors with your maturity.

Consider implementing a formal compensation committee once your board expands beyond founders. This group, typically including independent board members and investor representatives, can provide objective oversight of executive compensation decisions, helping avoid conflicts of interest and ensuring market alignment.

Maintaining Documentation and Flexibility

Document all compensation decisions and agreements thoroughly to prevent misunderstandings. Clear records of salary approvals, performance metrics for bonuses, and equity arrangements provide important historical context for future decisions.

This documentation proves particularly valuable during due diligence for funding rounds or acquisition discussions. Formal board approvals for compensation changes protect both founders and investors from potential disputes.

Maintain flexibility in your compensation structure as your company matures. You might shift from primarily salary-based compensation to a more balanced approach incorporating performance bonuses, equity refreshes, or other incentives as your company grows and your personal circumstances evolve.

Maximize Your Startup's Success Through Smart Compensation

Founder compensation represents just one aspect of building a successful startup, but getting it right creates a foundation for sustainable growth. The most effective approach balances personal financial needs with company resources while maintaining alignment with investors and team members.

The data shows that founder salaries continue to evolve with market conditions, with 2025 bringing a welcome increase after several challenging years. This trend reflects both improved funding conditions and recognition of the critical role founders play in startup success.

Smart founders recognize that compensation decisions send powerful signals to employees, investors, and the market about their priorities and confidence. Taking too little suggests potential financial instability, while excessive compensation raises questions about commitment to long-term value creation.

Your compensation strategy should evolve alongside your company, with regular reviews and adjustments as circumstances change. This flexibility, combined with transparency about your decision-making process, builds trust with all stakeholders while ensuring your personal financial stability supports your entrepreneurial journey.