The average startup CEO now makes $142,000 — down from $150,000 last year
CEOs of early-stage startups now make, on average, $142,000 — down from $150,000 last year, WSJ reports.
Some CEOs are even cutting their salaries down to zero due to a slump in venture capital funding.
CEOs in crypto, e-commerce, and direct-to-consumer industries are most impacted by the pay cuts.
The US economy may be approaching a recession soon — and CEOs of American startups are feeling the heat.
Kruze Consulting, an accounting company for startups, analyzed data from more than 400 of the firm's startup clients to see how their finances have changed amid economic headwinds, the Wall Street Journal first reported.
The consulting firm found that the average annual salary for CEOs based in the US, many of whom are early-stage founders, has dropped from $150,000 in 2022 to $142,000 as of this year — a four-year low, Kruze told the Wall Street Journal. Some executives are even cutting their paychecks to zero.
That's because CEOs of startups are seeking to save money to protect themselves from a dip in venture-capital funding this year. In the first quarter of 2023, global venture funding reached $58.6 billion — a 13% drop from the same quarter last year, according to a report from CB Insights, a research firm.
As a result, startups are now striking fewer deals are seeing their valuations drop, Kruze told the Journal.
"When these companies start getting low on funding, founders will do whatever they can to extend runway," Healy Jones, Kruze's vice president of financial strategy, told the Journal. "But some founders are clearly in a tougher spot than others."
But funding hasn't been distributed equally. Startups in the crypto, direct-to-consumer, and e-commerce industries are struggling to attract capital the most, Jones told Insider in an e-mail. "On the flip side, AI is BOOMING," he said.
While many CEOs of early-stage startups are taking significant pay cuts, a select few — including those in biotech and healthtech — have decided to increase their salaries, Jones said.
CEOs on the losing end of the funding spectrum will feel the brunt of the pay cuts.
"You have a small few who can sacrifice taking a salary for an extended period of time, but for most they need some salary to live and pay their bills," Steven Rosenblatt, co-founder of venture capital firm Oceans, told the Journal.
Rosenblatt did not respond to Insider's immediate request for comment before publication.
The consulting firm's findings on salary cuts come as CEOs across major corporations are taking pay cuts this year.
Tim Cook, the CEO of Apple, is taking a 40% pay cut in 2023, bringing his compensation package down from nearly $100 million in 2022 to $49 million in 2023, according to Securities and Exchange Commission filings in January. The cuts came after Apple shareholders expressed concerns over Cook's hefty salary.
That same month, Sundar Pichai, the CEO of Alphabet, Google's parent company, said top executives will take a "very significant reduction in their annual bonus" for an unspecified amount and period of time. The cuts, Pichai said, are "tied directly to company performance."
A month later, Eric Yuang, the CEO of Zoom, told his employees he will take a 98% pay cut this year and give up his corporate bonus —leaving him with a $10,000 salary. The announcement came after Yuang laid off 15% of his company's employees, or about 1,300 workers.
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