Founder Compensation Plummets 43% as Capital Efficiency Becomes Queen and King

Pilot Report Reveals Seismic Shift in Startup Pay

The lavish days of hefty founder salaries appear to be fading into the sunset. Pilot - an accounting firm serving startups and small businesses - has released its 2025 Founder Salary Report, and the numbers tell a sobering tale: Median founder compensation has plummeted a dramatic 43% in the past year.

Based on data from nearly 2,000 founders, the report paints a picture of a startup world grappling with a harsher funding landscape, where capital efficiency isn't just a buzzword but a survival strategy.

“The data is super clear - founders are rethinking compensation,” Waseem Daher, co-founder and executive chair at Pilot, said. “We're seeing founders make smarter calls to extend runway while figuring out reasonable personal compensation. It's a stark contrast to previous years and signals an ecosystem getting serious about financial discipline - which is exactly what should be happening.”

The Big Drop

The headline is stark: The median founder salary has nosedived from $132,000 in 2024 to $75,000 in 2025. To put that in perspective, nearly twice as many founders (60%, up from 37%) are now taking home less than $100,000 a year. It indicates that founders are tightening their belts, prioritizing their company's financial health over their paychecks.

However, it's not all doom and gloom on the salary front. The report also reveals that the percentage of founders taking no salary has decreased. Only 5.4% of founders reported taking no salary, down from 9% last year. This suggests that while salaries are down overall, more founders are at least taking some form of compensation.

VC Funding Dries Up, Bootstrapping Blooms

The Pilot report highlights a clear link between the decline in founder salaries and the challenges in the venture capital (VC) world. With VC funding more challenging to secure and the time between funding rounds expanding, many founders are feeling the pinch.

This funding scarcity has also led to a surge in bootstrapping. The percentage of bootstrapped companies relying on self-funding has jumped by a significant 77% in the past year. In 2025, 18% of founders surveyed reported bootstrapping their ventures, compared to 11.5% in 2023 and 10.3% in 2024. This rise in bootstrapping indicates that entrepreneurs seek alternative paths to growth in a tighter funding environment.

AI Founders: The Exception to the Rule

Amidst the general trend of declining founder salaries, there's a notable exception: AI startups. Founders of AI startups, now 40% of respondents (up from 14% last year), reported a higher median compensation of $90,000. This reflects the continued investor enthusiasm and market demand for AI-driven companies.

However, even AI founders aren't immune to the broader trend. Their average salaries have also decreased, from $135,000 in 2024 to $90,000 in 2025, a 33% drop. This suggests that while AI remains a hot sector, the pressure for capital efficiency impacts founders across the board.

Within the AI sector, salaries vary considerably depending on the specific application. AI founders working in big data reported the highest average salaries at $154,069, while those in AI marketing reported an average of $81,516.

The Affordability Factor

So, how are founders determining their compensation in this new environment? The Pilot report reveals the most common factor is "what the startup can afford." A significant 31% of founders cited this as their primary consideration. This underscores the focus on financial prudence and runway preservation.

Interestingly, founders who benchmarked their salaries against market rates earned significantly more – 79% more on average – than those who prioritized affordability. This suggests that while financial constraints are a major driver, some founders still prioritize competitive compensation.

Other Key Findings

The Pilot report also sheds light on several other factors influencing founder compensation:

• Funding Levels: Unsurprisingly, salaries tend to increase with the amount of funding raised. However, Pilot notes that this isn't the strongest correlation and should be considered alongside other factors.
• Company Size: Salaries generally rise with company revenue and the number of full-time employees but tend to level off after a certain point.
• Company Phase: Founders in the "growth" or "optimize" phases of their company's lifecycle tend to pay themselves more. On average, founders in growth mode pay themselves 20% more.
• Geography: Location plays a significant role in founder compensation, mainly mirroring the cost of living. Salaries dropped across all regions this year, but some areas experienced steeper declines than others.

A Call for Balance

The Pilot report emphasizes that there's no magic number for founder compensation. Instead, it's about finding a balance between personal sustainability and the company's financial needs.

“Understanding where you fit in today's capital-efficient landscape is how you build companies that survive when things get tough,” Daher said. “This isn't just about cutting costs - it's about making strategic decisions that balance personal sustainability with runway preservation.”

In other words, founders need to pay themselves enough to stay focused and motivated, but not so much that it jeopardizes their company's future. It's a tightrope walk, but in today's economic climate, it's a necessity.

This article originally appeared on Dataconomy and is republished with permission.