What should you pay yourself as an AI founder?

If you’ve read this year’s founder salary report, you know the news: Salaries are down 43% across the board. Though when we look at AI founders specifically, the story is a little different. 

There are 287% more AI companies in our dataset this year, or 40% of all companies, up from 14% the year before. That’s a huge leap. While their salaries dropped, they dropped less than other founders. And whereas AI founders made slightly less than others in the past, they now make more. 

Let’s explore the data and at the end we’ll discuss how to make a case for an effective salary.

Most AI startups are generalists

One-third of startups in our dataset said they were general AI startups. The next largest categories were AI-powered SaaS, big data startups, and healthcare AI startups. 

What’s really interesting is those aren’t all net-new businesses. The average age of a company in our dataset is seven years. Many of these companies and founders made a transition from consumer, fintech, and SaaS, and some made the hard pivot to being general AI.

If we look at how much founders are paid by industry, we see that those in big data, software, consumer goods, and industrials lead, whereas those in telecom, cybersecurity, SaaS, real estate, and marketing lag behind. 

Our rough analysis of that is that AI startups in industries with plentiful datasets have a harder time competing, as it’s more difficult to accumulate a data moat. This is true in fintech, telecom, real estate, and marketing. That difficulty may show up in lower founder salaries.

AI founders make 20% more than the median founder

Like all founders, AI founders experienced a decrease this year. There is also a huge gap between those that are bootstrapped ($65k median salary) and those that were VC-backed ($95k median salary). Though this gap may not necessarily be what it seems—some founders with the means to bootstrap may have greater personal wealth and less need for a salary to begin with.

AI salaries are highest in the growth phase

We asked startups to classify themselves into phases—are they growing, declining, sustaining, or optimizing? As you can see, AI startups are less likely to be declining or growing, whereas they are more likely to be in “optimizing” mode. No doubt, this at least partly reflects the fact that models are changing so rapidly, there are so many overnight entrants, and it’s less easy to find product market fit.

In terms of pay by phase, AI founders outearn their peers in all regards, but especially the growth phase. The “declining” disparity in the chart pictured is due to sample size—few AI startups are declining.

AI salaries by satisfaction level with their salary

We asked founders, how happy are you with your pay? Sixty-seven percent say it’s just right, 29% say it's too low, and 4% say it’s too high. AI founders are both somewhat more likely to be satisfied with their salary and to be making more. 

The more a founder has raised, the higher they are paid

There is a clear, positive correlation between salary and the amount that AI startup has raised. The more a founder has raised, the higher they are paid. At the very low levels we are likely seeing founders taking little to no salary so they can fund operations. As we discuss at the end of this guide, bootstrapping is increasingly common.

AI salaries increase with the number of employees

As with all founders, AI founders pay themselves more based on the number of employees they have. Fewer AI startups replied to this question than was normal in our dataset, however, those that did tended to have fewer employees. This explains why in the chart pictured, salaries appear to be lower than the median for all startups.

AI salary by region 

Average AI founder salaries are either equal to or higher than all founder salaries across the country—but especially high on the coasts and in particular, Boston. This may be due to all the healthcare AI startups there, and in particular, a small number of exceptionally well-paid AI founders. 

How to make a case for a higher salary

You’ll want to make the case for the right salary, not necessarily the highest salary, and there are more factors to consider.

On the one hand, taking a lower salary can help you fund operations and potentially make more with the money you have—whether you raised it or are self-funded. This year, bootstrapping is far more common—77% more founders said they had taken no funding this year compared to the prior year (18% versus 10%). When asked, those founders say they’d rather invest that money into growth. 

On the other hand, too little pay can be dangerous too. You have a life outside your startup and if your low salary causes you to lose sleep and worry about rent and caring for dependents, you may lose focus. This can be equally detrimental to your growth.

When in doubt, ask your board. A significant number of respondents said they asked their investors and advisors, and it was a conversation around what amount would allow maximum growth without unnecessary distraction. 

We hope you found this report useful. For more, read the full salary report, and write us with questions.