Starting a business from the ground up isn’t easy. While it might pay off in the end, many founders take-home humble paychecks — and some take home nothing at all.
According to a report from the accounting firm, Pilot, of 500 startup founders surveyed, almost half (46%) get paid less than $100,000 annually, with the average salary among founders standing at $114,000 a year.
Over 5% of founders get paid nothing.
Waseem Daher, co-founder and CEO of Pilot, told Inc that — as a three-time founder himself — he understands the hesitancy of entrepreneurs to pay themselves generously, as they often redirect those funds towards more pressing business needs such as hiring employees and operations. However, that humbleness can also backfire, he says.
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“If you’re constantly distracted, wondering how you’re going to pay rent or personal expenses this month, you’re not going to be the best executive for the business,” Daher told the outlet.
The biggest difference in founder salary, according to the report, has to do with company funding. Founders at “bootstrapped” companies (self-funded and operating with their own resources) were significantly paid less on average than founders at companies that were VC-backed (supported by investors or venture capital firms).
Fifty percent of bootstrapped founders receive a salary between $1-$100,000, while 60% of VC-backed founders are paid between $50,000 and $150,000, per the report.
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For those startup founders who are not seeing financial compensation yet, fear not. Dozens of founders have had their hard work pay off — literally, after being acquired by larger companies. Instagram founders Kevin Systrom and Mike Krieger sold to Meta for $1 billion in 2012; Whole Foods founder John Mackey sold to Amazon in 2017 for $13.7 billion; and LinkedIn founder Reid Hoffman sold to Microsoft in 2016 for $26.2 billion.
