How Much Money Do Startup Founders Have In Their Bank Accounts?

We asked over 200 startup founders the one question you’ve always wanted to ask but were too afraid to: “How much money do you have?”

August 24, 2015

Money. It’s intoxicating. I’m obsessed with it. You’re obsessed with it. Those who say they aren’t are lying. That, my good friend, is why we’re doing an entire series on MONEY!

In June, we (The Hustle) raised a small seed round of $250,000. It took us two weeks to raise the money from ten different investors. The checks ranged in size from $10,000 to $100,000. Each investor was a startup founder, and most were past speakers at Hustle Con. The average investor was 29-years-old.

I’m not sure about your financial situation, but I was amazed at how easy it was to raise a quarter of a million bucks from people who were only a few years older than me. A $25,000 investment — that’s a whole helluva lot of money.

Maybe it’s because I’m a frugal Midwesterner, but our fundraising process got me thinking… just how much money do startup founders actually have?

To make sense of this, we asked over 200 startup founders the one question you’ve always wanted to ask but were too afraid to: “How much money do you have?”

Get a coffee and grab a seat… it’s data time.

Note: Here are nine representative profiles we grabbed from the list. For all you data nerds, consider this your first warning that this is by no means a controlled, statistically significant, approved by the FDA, grass-fed experiment. Also, the responses were anonymous so we just made up the names and pictures.

Bryan, 33
san francisco, california
Title: Founder
Salary: $500,000
Salary 5 Years Ago: $160,000
Checking Accounts: $30,000
Savings Accounts: n/a
Total Cash: $30,000
Company Valuation: $500M
Stock Value: $50M
Ownership Stake: 10%
Other Liquid Assets: $2.5M
Other Income: n/a
Retirement Funds: $300,000
Credit Card Debt: n/a
Net Worth: $52,830,000

Diversification not only includes investments in your portfolio, but also your own human capital and its long term cash flow stream.

Thomas, 29
san francisco, california
Title: CTO
Salary: $85,000
Salary 5 Years Ago: $40,000
Checking Accounts: $6,000
Savings Accounts: n/a
Total Cash: $6,000
Company Valuation: $100M
Ownership Stake: 23%
Stock Value: $20M
Other Liquid Assets: $0
Other Income: $0
Retirement Funds: $0
Credit Card Debt: n/a
Net Worth: $20,006,000

I should have saved more money. I have a liquidity event coming up soon (will cash out around $1m), but currently as stated above I have $6k to my name.

Abby, 36
los angeles, california
Title: COO
Salary: $250,000
Salary 5 Years Ago: $80,000
Checking Accounts: $250,000
Savings Accounts: $500,000
Total Cash: $750,000
Company Valuation: $15M
Ownership Stake: 50%
Stock Value: $7.5M
Other Liquid Assets: $40,000
Other Income: $150,000
Retirement Funds: $50,000
Credit Card Debt: n/a
Net Worth: $8,340,000

Investing in retirement accounts is for the birds…its better to invest your money in investments that will bring passive income later on down the line. Property etc.

Riley, 36
seattle, washington
Title: CEO
Salary: $0
Salary 5 Years Ago: $135,000
Checking Accounts: $78,000
Savings Accounts: $118,000
Total Cash: $196,000
Company Valuation: n/a
Ownership Stake: 100%
Stock Value: n/a
Other Liquid Assets: $800,000
Other Income: $300,000
Retirement Funds: $275,000
Credit Card Debt: $560,000
Net Worth: $711,000

You’re almost never going to get rich working for someone else. Unless you happen to join the next Google or Facebook early on, you’re at best likely to pay off your mortgage early (which is a fantastic scenario, but it’s not going to emancipate you from the rat race).

Preston, 41
seattle, washington
Title: Owner
Salary: $350,000
Salary 5 Years Ago: $150,000
Checking Accounts: $1,1667
Savings Accounts: $316,000
Total Cash: $317,667
Company Valuation: n/a
Ownership Stake: 100%
Stock Value: n/a
Other Liquid Assets: $1,000
Other Illiquid Assets: $500,000
Retirement Funds: $130,000
Credit Card Debt: $0
Net Worth: $948,667

Your retirement fund is extremely important. Set it to max and never touch it.

Gabriel, 25
san francisco, california
Title: Founder
Salary: $0
Salary 5 Years Ago: $8,000
Checking Accounts: $14,466
Savings Accounts: $35,862
Total Cash: $50,328
Company Valuation: n/a
Ownership Stake: 57%
Stock Value: n/a
Other Income: $200,000
Other Liquid Assets: $3,738
Other Illiquid Assets: $169,000
Retirement Funds: $27,096
Net Worth: $81,162

Buying a home is stupid. It may make sense in a strictly financial sense, but I think people who recommend buying your own house completely ignore opportunity cost of that money, and the fact that it locks you into the same career, house and area for many years. In my opinion, buying a home isn’t worth it.

Brady, 35
san francisco, california
Title: Co-Founder
Salary: $150,000
Salary 5 Years Ago: $175,000
Checking Accounts: $20,000
Savings Accounts: $10,000
Total Cash: $30,000
Company Valuation: $200M
Ownership Stake: 5%
Stock Value: $10M
Other Income: $120,000
Other Liquid Assets: $0
Other Illiquid Assets: $0
Retirement Funds: $85,000
Net Worth: $10,115,000

10 years ago I thought the real estate prices were ridiculous. I wish I had bought then. 401Ks only hurt your monthly cashflow…

Elijah, 25
Title: CTO
Salary: $125,000
Salary 5 Years Ago: $0
Checking Accounts: $13,445
Savings Accounts: $0
Total Cash: $13,4458
Company Valuation: $31M
Ownership Stake: 7.7%
Stock Value: $2,387,000
Other Income: $0
Other Liquid Assets: $86,863
Other Illiquid Assets: $133,354
Retirement Funds: $0
Net Worth: $2,487,308

Jumping between companies every year is more financially advantageous than staying at one company for four years. Ask for equity equal to all the other founders or don’t do it.

David, 24
Title: CEO
Salary: $55,000
Salary 5 Years Ago: $0
Checking Accounts: $3,500
Savings Accounts: $18,000
Total Cash: $21,500
Company Valuation: $4M
Ownership Stake: 79%
Stock Value: $3.16M
Other Income: $10,000
Other Liquid Assets: $500
Other Illiquid Assets: $10,000
Retirement Funds: $0
Net Worth: $3,182,000

Hourly wages are the worst and don’t buy real estate until you’re ready to settle down.


How we collected the data

The survey was a Google Form with 18 questions (here are the exact questions we asked). The form was sent to past Hustle Con speakers and our investors. It was also posted on Hacker News. Shockingly, 200 people responded within two hours, which to me is just as interesting as the results of the survey.

Now, if you’re a data scientist, you’ll most likely feel butthurt while reading this. Why? Because there are admittedly a few errors in the way we collected the data.

For example, in one question we asked how much each founder had in illiquid assets (stocks, property, etc.). Then, in another question, we asked about their startup’s valuation and their stake in it. Because of that, some of the folks we surveyed put the ownership of their startup in the illiquid question, which wasn’t our intention.

So please, for the love of god, don’t write in the comment sections below about how this survey doesn’t live up to Gallup protocol. The point of this survey was strictly curiosity and entertainment.



Question: MEAN // MEDIAN
What’s your annual salary?: $99,101 // $75,000
What was your salary 5 years ago?: $81,239 // $62,500
How much is in your checking account?: $47,580 // $10,000
How much is in your savings account?: $170,464 // $5,000
How much cash do you have total?: $218,044 // $25,600
What’s your company’s valuation?: $98,226,389 // $5,000,000
How much of the company do you own?: 55% // 40%
Annual income other than salary?: $198,788 // $30,000
How much do you have for retirement?: $101,531 // $7,000
How much credit card debt?: $14,586 // $0
How much longterm debt?: $164,844 // $0
Overall net worth: $1,819,716 // $62,602

SEE ALL OF THE DATA


So here’s the deal. What’s interesting isn’t why people invested, but how. The why is easy. Investors thought The Hustle was undervalued, so they gave us money to help us grow in exchange for a small percentage in ownership. In the future, when (if) we get acquired or go public, they’ll get rich as hell. Simple.

But the ‘how,’ that’s where I’m curious. How do a bunch of 20-somethings have so much cash? I wanted to know literally how much income they have and what their bank accounts look like. Yep, I’m a nosey little prick. You’re welcome.

But first, what’s an investor?

According to AngelList, to be an accredited investor you need to a) make over $200k per year, or b) have at least $1 million in assets, not including your house.

But here’s the thing — most angel investors do a handful of investments each year. Why? Because most angel investments fail. In order to increase your likelihood of getting a return, an angel should have at least 20 companies in their portfolio. So it’s likely that The Hustle wasn’t their only investment this year.

And even more interesting, our round was actually oversubscribed, meaning we had lots of other rich 20-somethings willing to give us money whom we turned down.

Amazing. A bunch of rich-ass people tossing money around. I don’t know what else to say, except that it is interesting.

Just a lil bit of analysis

  • Where are all the women?: Of the 200+ people who answered the survey, six were women. This issue deserves more than just a bullet point, so we’ll address it in another post, but I was shocked that so few women answered the survey.
  • Millenials for the win!: Tech startups are a young person game. The average age of the founders who responded to the survey was 30-years-old. That’s tough to hear for anyone over 35, but numerous studies claim the same. Of course, that doesn’t mean you can’t or shouldn’t found a startup after age 40, it’s just that most founders are in the 20- to 30-year-old range.
  • Founder’s retirement funds: Less than 50% of the founders surveyed had a retirement fund. Roughly 40% of working Americans have a 401k, but you’d think that a bunch of young, rich yuppies would all have retirement funds. I mean, the average salary of a founder was close to $100,000. Surely they’d want to stash away some cash in a 401k, right? Nope.

    There are a few reason why this is the case. The most obvious is that entrepreneurs aren’t like the average American worker. They’re willing to go months, and sometimes years, without any pay in order to get their business off the ground. A 401k hurts cash flow and makes that tough. Also, startups are known for their amazing perks like free lunches, snacks, and quirky offices. They do this to recruit the best talent. But a 401k? That’s not exactly a sexy. And finally, the most important factor why founders don’t have retirement funds brings me to my next point.

  • It’s easy to make boatloads of money in tech: One of the biggest issues for a growing a startup is recruiting. They can’t get enough people in the door. Because of that, salaries in tech are outlandishly high. It’s not uncommon for a developer fresh out of college to get $110,000 in salary. And the jobs are plentiful, too. So why worry about a 401k, or saving anything at all, when you can land a six-figure gig with ease? Especially in Silicon Valley, where failure — as long as it’s a BIG failure — isn’t looked down on, but rewarded with a job at Google.
  • Low bank accounts: The median stake a founder had in their startup was just over $1,000,000. However, the median amount of cash on hand was $25,500, far lower than I expected. You’d think that they would have a fair bit of money in checking and savings accounts.

So there it is. Instead of me telling you how I feel, take a look at the data. We made it into a Google Form so you can copy it for your own analysis. If you do end up writing a post about the data we collected, please post a link to your article in the comments section on this post and we’ll share it.

Did we answer our original question — how can a bunch of 29-year-old startup founders afford to make a handful of $25,000 investments each year? Too be honest, no, I don’t think we did. But at the very least we now have an accurate picture of where the money comes from.

Next week we’ll have another post about money. To get it, enter ye ole email in the box below.

photos via stocksnap.io



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