Salary of a Early-Stage Startup CEO
Founders often wonder how much they should pay themselves when they start a company. The answer is simple: enough to live, focus on building a company, and not worry about paying bills. But definitively not enough to enjoy anything that will distract you.
In this post, I explain how much I paid myself while building Codiga. This is just one data point that may not be relevant to you or other founders.
Lower your cost of living
Before starting Codiga, I saved enough money to pay the bill for a year. Having a job in a big tech company helped, and I saved almost everything I received.
Before going full-time on Codiga, I relocated to the Denver area to lower my cost of living and switch from a one-bedroom apartment at $3,500 in a high-cost-of-living area to a two bedrooms house at $2250 in a lower cost of living area.
Never believe you will start having revenue or raise a round too soon. It always takes more time than you think. It took me over six months to close my first (and last) funding round, and I have seen people taking nine months.
Never be the highest paid
I received $120k from Techstars when I started (which is the standard investment term). I used this money to grow the company and hire. I started to pay myself $45,000 a year only after closing the first $500,000 tranche of our seed round. And I paid myself $90,000 a year after closing our $2,100,000 round.
Throughout the life of the company, I was never the highest paid for the following reasons:
Paying yourself too much means taking resources away to grow the business.
Paying yourself less than your employees show how you value them (consciously or not)
Maximize runway
One of your job as a CEO is not running out of money. For this, you either increase income (sales, fundraising) or lower expenses (mostly salaries for a software company). At a very early stage, lowering your salary will impact and maximize your runway, which you need to overcome the (many) mistakes you will make.
Remember that the value you get out of the company is your equity. The cash in the bank must be used to grow the business and never your bank account.