How Much Do Founders Really Earn in Europe? Insights from a New Study
Ah, Europe—the land of fine wine, exquisite cheeses, and now, it seems, founder compensation! A recent study by Creandum in collaboration with Slush has unfurled like a poorly executed magic trick, revealing some surprising figures about how much these entrepreneurial wizards take home. Spoiler alert: it’s a lot more complicated than it seems!
What’s the Study About?
Conducted in the fall of 2023, this study roped in over 700 participants from almost 50 cities across Europe. The goal? To develop a comprehensive database detailing early-stage founder compensation. We’re talking about salaries, bonuses, equity shares—you name it. The researchers also took a stab at understanding how factors like location, company size, gender, and even the company’s financing round affect these figures. Essentially, they’ve put the finances of our favorite entrepreneurial dreamers under a microscope. And no, the findings didn’t include selling their kidneys for startup capital—though you might wonder if some founders felt that desperate!
So, How Much Do Founders Earn?
When it comes to founder salaries, the results are as varied as a buffet line in an all-inclusive resort. In the early stages, say the bootstrapped and pre-seed phases, founders can find themselves pocketing a modest €40,000 to €50,000 a year. Now, that’s practically sandwich money in London! But hold on to your bell-bottoms, because once they hit the Series A phase, they can magically see their salaries leap to over €100,000. It seems that the old adage “It takes money to make money” really rings true!
Salary Based on Financing and Equity Share
But wait, there’s more! As founders drag more cash through the door (think of it as throwing a unicorn a birthday party), both their average and median salaries rise like sourdough bread left out on a warm day. There’s a jaw-dropping 72% jump in median salary when financing exceeds €1 million. This is typically around the time institutional investors waltz in, puffing out their chests and demanding to know why founder salaries weren’t on the menu earlier.
Location is Key!
Ah, geography! It plays a huge role in how much founders rake in. Those lucky enough to set up shop in Great Britain could be looking at a cozy average salary of around €100,000. Meanwhile, our friends in the Baltic states might only be graced with about €30,000. A clear reminder that what might be minimum wage in one place could be lunch money in another! It’s basically the European equivalent of a game of Monopoly, where moving your piece to Mayfair drastically ups your odds of landing that elusive cash flow.
Industry Matters, Too!
And it seems that where you land in the startup world matters as well. The fintech industry is a golden ticket, with founders earning hefty salaries that make you want to invest in a monocle and a top hat. However, it’s worth noting that this sector has seen a slight dip recently. B2B SaaS companies, on the other hand, are like that surprising leftover pizza—always appreciated and often worth more than you think, with salaries climbing steadily from the onset.
Function and Gender Pay Gap
Now, let’s address the elephant in the room: the ever-looming gender pay gap. Founders doubling as CCOs or CROs tend to take home more than their CEO counterparts, with CROs often grabbing the highest average of about €90,000. But here’s the kicker: female founders earn about 13% less than their male colleagues once they hit the seed phase, even though they initially appear to be outperforming their male counterparts in the bootstrapped phase. Ladies, the startup world needs to catch up faster than a taxi in London on a Friday night!
Conclusion: What Have We Learned?
This study is a treasure trove of insights on founder compensation! Each factor—be it the company phase, the ever-elusive funding, or the founder’s role—dictates just how heavy their wallets get. If you’re hoping to start a business that makes you more Roman emperor than a struggling artist, it may be worth considering your strategy, location, and even the title you choose to brand yourself with. After all, nobody ever said crowdfunding had to mean crowd-sourcing your rent!
Now, if you’ll excuse me, I have to reflect on my life choices and wonder why my dreams of being a tech billionaire haven’t materialized yet. Perhaps I should have bought a top hat instead of saying “no” to that degree in chemical engineering!
A new study conducted by Creandum in collaboration with Slush now offers exciting insights into founder compensation in Europe.
What is the study about?
The study conducted by Creandum and Slush aims to create a comprehensive database of early-stage founder compensation. The survey was conducted in fall 2023 and concluded with over 700 participants from almost 50 cities in Europe. The aim was to get a deeper insight into the founder’s salaries, bonuses and equity shares. In addition, location, company size, role, gender, total revenue and the company’s respective financing round were also taken into account. But what came of it? How much do founders really earn?
This is how much founders earn in Europe
The results of the study provide valuable insights into the income of founders in Europe. We have summarized the most important findings for you:
Salary according to company phases
The salary of founders varies greatly depending on the phase of the company. In the initial phase, the so-called bootstrapped and pre-seed stage, the average salary is often significantly below what many would expect. During these phases, founders earn an average of 40,000 to 50,000 euros per year. However, once the company is in the seed phase and grows beyond that, founders can expect to receive more salary. In the Series A phase, founders earn an average of over 100,000 euros annually. This clearly shows that as the size of the company increases, founder salaries also increase.
Image source: CreandumThis is how much founders earn in the company phases
Salary based on total financing and equity share
As funding increases, both the average and median salary of founders increase, with the largest increase in median salary of 72% occurring when funding is $1 million. € exceeds. This jump is often due to the participation of institutional investors, which expands the scope for founder salaries. Benefits then increased by 20 to 30% for every additional €10 million in financing until they stagnated at €20 million. Only when financing amounts to €50 million or more do larger jumps in salary occur; in between, the salary remains relatively stable.
Salary by location and industry
The location of a company also plays a large role in founder compensation. Founders in Great Britain earn the most money at an average of 100,000 euros per year, while founders in the Baltic states earn significantly less at around 30,000 euros. The cost of living in these regions obviously plays a role, but access to capital and investors also varies greatly from country to country.
The industry in which the startup operates also has a big impact on the founder’s salary. Salaries are particularly high in the fintech industry, although these have fallen somewhat over the last year. Founders of B2B SaaS companies also earn significantly from phase A onwards, often even more than their fintech colleagues.
Salary according to function and gender
Founders who also serve as CCO or CRO often earn more than CEOs. Commercial executives also generally receive higher salaries than founders in CEO positions. CROs in particular, who have a significant influence on company growth, are currently particularly valuable and receive the highest average salary of €90,000.
In startups, there is a clear pay gap between male and female founders, which is particularly visible from the seed phase onwards, with 13% in favor of men. In the pre-seed phase, the difference is less than 2%, while female founders in bootstrapped companies earn 29% more. However, the data is less representative due to the smaller number of female founders.
Conclusion: This is how much founders earn in Europe
The study offers important insights into the compensation structures of founders in Europe. It becomes clear that a founder’s salary depends heavily on the phase of the company, overall funding, location and industry. Those who start a business in the pre-seed phase often have to expect a low salary, while salaries increase significantly in later phases. Founders who take on the role of CRO also have the chance to earn significantly more. It is therefore also worth thinking about your own role in the company and your long-term financial prospects.
