43% founder pay cut: the new reality of startup compensation in 2025

Founder salaries dropped 43% in the last year. It’s a startling figure, but it’s the new reality of building startups in 2025. The startup world has changed significantly in the past few years, with capital efficiency becoming the priority for founders and investors alike. Today, we're releasing our annual Founder Salary Report, which serves as an essential benchmarking tool for founders making compensation decisions.

This year's report analyzes our most robust dataset yet—1,844 founder responses across various industries, funding stages, and geographic locations. The data is clear: Founders cut their pay to extend runway and show investors they're serious about capital efficiency.

Investors scrutinize burn rates more than ever, and founders face hard questions about their own pay as a result. How much should I pay myself? How does my salary affect my company's runway? What are other founders in my position doing? 

Our 2025 report provides data-driven insights to help answer these critical questions.

Founder salary report: key findings

The average founder salary plunged from $132,000 to $75,000 in one year. That's a 43% cut. Now, 60% of founders pay themselves less than $100,000—nearly double last year's 37%. This isn't just penny-pinching, either. It shows founders completely rethinking their financial relationship with their companies.

That said, fewer founders are working for free. Only 5.4% take zero salary, down from 9% last year. Even in tough markets, founders need to pay rent. Many founders (31%) now set their pay based on "what the startup can afford," while those who match market rates earn 79% more. That extra cash comes at a cost: shorter runway.

The smartest founders match their compensation to their runway needs. In 2025, capital efficiency isn't optional—it's survival.

Expert insights

Capital efficiency in the current market

“Founders are being hit hard by turbulent markets and that is being reflected in their compensation. In this tough environment, founders have to find the right balance between their compensation and extending runway. But it’s not all bad news—thanks to AI, founders are becoming scrappier and are doing more with less.” -Ben Parr, Co-founder of Octane AI and Theory Forge Ventures

Salaries are the largest expenditure in almost any business and managing them carefully is key for capital efficiency, founder salaries are no exception. Every dollar you pay yourself, is another dollar you can’t spend on funding operations. This tradeoff gives you a longer runway, better strategic options, and less pressure to raise money when terms aren't in your favor.

Founders who tie their pay to company milestones build stronger companies and create natural accountability. 

The rise in bootstrapping

“Lack of capital has not stopped the most determined founders—it’s just changed their playbook. We’re seeing a rise in bootstrapping as founders build leaner, move faster, and leverage AI to get farther with less. While it may not be right for everyone or every endeavor, it’s a powerful shift that’s redefining what it means to launch and grow a startup today.” -Frank Gruber, Founding and Managing Partner at Established Ventures

Bootstrapped companies jumped 77% from last year, now making up 18% of our survey. More founders choose to self-fund rather than chase scarce VC dollars.

The number one job of a CEO is to make sure the company doesn’t run out of money. But, founders also need to support themselves. Without access to outside capital bootstrapped founders face a tough balancing act. 

AI bucks the trend

“Tech talent is expensive and AI startups are pulling in more capital than any other sector. So, it tracks that AI founders are paying themselves 20% more than their peers. But, while the opportunity is real, so is the burn. GPUs, data, cloud add up fast. My advice: stay lean, validate early, and protect runway because most won’t make it.”  -Lolita Taub, GP at Ganas Ventures

AI startup founders buck the downward salary trend. These founders—now 40% of respondents, up from 14% last year—pay themselves a median $90,000. This reflects continued investor enthusiasm for AI, though these salaries are still lower than last year.

AI founders earn more because their businesses operate differently. Despite having access to more funding, many choose modest salaries to accommodate the high infrastructure costs and specialized talent needs that consume significant capital in AI ventures.

Regional differences and investor expectations

The salary gap between San Francisco and smaller tech hubs is closing. Remote work changed the compensation equation. Founders now set pay based on company finances, not zip codes.

Regional startup cultures shape compensation philosophy. Midwest founders prioritize profitability before raising their pay. Coastal founders more often benchmark against funding milestones regardless of profitability. Know your region's norms before setting your salary.

Also, talk openly with your board about compensation. Come prepared with data-driven proposals that link your pay to company performance. This establishes a governance standard for financial decisions (in corporate finance, we call this “fiduciary alignment”). You’ll find that our Founder Salary Report is plenty detailed, so it can give you the benchmarks to make these conversations productive.

Investors support reasonable founder salaries that let you focus without financial stress—if those amounts match your company's reality. The key is to align your pay with company milestones. This creates a clear understanding of how your compensation fits into your overall financial strategy.

How to set your compensation

• Benchmark against similar companies. Compare your compensation to businesses at your funding stage, in your industry, with comparable team size. Our data shows founders who benchmark against market rates earn 79% more—but that might burn through your runway too quickly.
• Link your pay to company milestones. Show your board exactly when and why your compensation will change. This creates alignment and trust.
• Remember equity matters more than salary. A lower salary paired with meaningful equity creates better alignment with your company's long-term success.
• Be transparent with your team. This builds trust and reinforces your values around financial responsibility.
• Consider your personal circumstances. Taking a lower salary can help you reinvest in the business, but if you're stressed about covering essentials like rent or child care, it will be hard to give your startup the full focus it needs to succeed.

The bottom line

The 2025 Founder Salary Report confirms we've entered a new era. Founder pay dropped 43%. The majority now earn less than $100,000. This is how startups respond when capital gets tight.

At Pilot, we handle finances for thousands of startups. We see these decisions play out daily. We know which practices drive sustainable growth and which burn through cash too quickly.

Want the complete findings? Download the full 2025 Founder Salary Report to learn more. And for help managing your startup finances more effectively, contact our team of financial experts. We make business finance simple and keep it that way.