Knowledge

Most startup founders earn less than £32,000

Posted on Jan 15th, 2014 | Get paid

New research has poured cold water on the myth of high-flying startup entrepreneurs, revealing that 73% of startup founders earn less than $50,000 (roughly £32,000) a year.

Of the 11,160 companies surveyed around 8,000 founders said their salary fell in the $0 – 50,000 bracket, whereas only 309 said that they earned over $175,000 (roughly £106,000).

Australia boasted the highest paid founders, where the average salary was over $70,000, whereas Indian founders were the worst paid, with an average salary of around $30,000. Meanwhile, founders in London enjoyed an average salary of $45,611 (roughly £27,750).

Speaking at a startup convention back in 2008 Peter Thiel, co-founder of PayPal, said that the less a founder is paid, the more likely the company is to succeed. He went on to say:

“The CEO’s salary sets a cap for everyone else. If it is set at a high level, you end up burning a whole lot more money. It aligns [their] interest with the equity holders. But [beyond that], it goes to whether the mission of the company is to build something new or just collect paychecks.”

The data ties in closely with a report published in 2011 which found that startups have less chance of success if they scale prematurely, often resulting from over-investment in personnel.

Useful tools and resources

Business guides

From understanding expenses to starting a limited company, we've a range of jargon-free business guides for you to download and keep.

Invoicing software and templates

Create, send and store sole trader invoices in a snap with our free invoice software. You can also download a selection of invoice templates for all business types.

Take-home pay calculator

Use our Take-Home Pay Calculator to work out your true earnings and see if you could save money with a different company set up.