Running a biotech organisation is no small feat, leaders like founders and CEOs  face a complex and volatile business landscape that requires them to be experts in life sciences, technology and business. With pressure to secure funding, develop new technologies, navigate regulatory red tape, and attract top talent.

However, for Founders, CEOs and other C-Suite leaders of organisations, there is one question often remains overlooked—how should they pay themselves?

As a founder or leader, it is hard to determine how much you should be paying yourself, especially in the early stages of development before you can secure serious investment.

Pay yourself too much, and you may deplete resources that are needed for fuelling the company’s growth.

Pay yourself too little, and you risk personal financial strain, which will create extra stress for a position that is stressful enough at the best of times.

So, striking the right balance is key to keeping your business and your personal life sustainable as a leader.

What This Guide Covers

To help you determine how and when to compensate yourself, our founder compensation in biotech guide, will shine a light on:

What is the Average Pay for BioTech Leaders?

Founder compensation in biotech can vary significantly depending on factors like company size, funding stage, and geographic location.

Leadership teams of BioTech firms in the pre-seed stage will typically live off savings or pay themselves a very modest salary to keep them afloat, while the business’s capital is allocated to more pressing needs.

Once investment starts coming in to an organisation, a leadership teams can begin to properly compensate themselves for their work, with C-Suite leaders of growing biotech organisations able to secure salaries in the region of £100k-£300k.

Then once a organisation has been fully established, with plenty of investment and revenue generated from bringing products to market successfully, C-Suite teams can expect to be able to compensate themselves very generously, with some leaders being able to receive compensation upwards of £500k a year.

Factors Influencing Compensation

There are several different factors which will play a role in determining how much biotech leadership teams can and should compensate themselves:

  • Organisation Size: Larger organisations that have a consistent flow of revenue and funding will have more cash flow to support higher salaries for founders, C-Suite teams and leaders.
  • Funding Stage: Pre-seed and seed-stage startups often have limited capital, making founder pay a lower priority. But BioTech organisations that have secured serious funding will have enough capital to allow for a generous compensation.
  • Geographic Region: Leaders in high-cost regions like London or San Francisco may require higher levels of compensation to cover living expenses, while leaders in lower-cost regions will be able to sustain themselves on more modest compensation.
  • Sector Focus: Organisation focused on high-revenue potential areas like gene therapy may attract more investment, which will create the opportunity for higher levels of compensation.

How Leadership Teams of BioTech Organisations Should Compensate Themselves During the Startup Stage

In the early stages of scaling a biotech organisation, cash flow is often limited before a product is brought to market, meaning founders and leadership teams must be resourceful. Many will founders choose to reinvest initial funds into research, development, and talent acquisition rather than drawing significant salaries.

Compensation Options

  • Deferred Salary: Founders and leadership teams can opt to delay receiving a salary until the business reaches key financial milestones.
  • Equity-Based Compensation: Many founders and leaders take a minimal salary but compensate themselves through equity, which can pay off as the company scales or the founder exits.
  • Minimal Salary: Founders and leaders can pay themselves just enough to cover living expenses and keep the lights on while preserving capital for business needs until the business is bringing in sufficient cash flow to increase their compensation.

Prioritizing Investment Over Salary

During the startup phase, it’s often wise to prioritize investment into your organisation over personal compensation. Building a strong foundation—whether that’s scaling R&D or expanding your team—will likely pay greater long-term dividends than a larger salary.

When Should BioTech Leadership Teams Start Paying Themselves?

Determining when to start paying yourself a more substantial salary requires thoughtful consideration of your organisation’s financial health. Some common milestones include:

  • Series A or Beyond: Once your company has secured Series A funding, it’s typically appropriate to allocate some funds to salaries for leadership teams.
  • Profitability: Achieving consistent revenue or profitability is another key indicator that it’s time to draw a salary.
  • Significant Partnerships or Grants: Securing strategic partnerships or grants can create additional financial flexibility for founder/leadership compensation.

Risk vs. Reward

It’s crucial to assess the financial health of your organisation before deciding on compensation. A high salary before your organisation is stable can jeopardize long-term success, while a carefully considered compensation plan can ensure both personal and business sustainability.

Salary vs. Dividends: What’s Better for Founders?

When it comes to compensating yourself as a biotech founder, you’ll face the decision between taking a salary or drawing dividends—or perhaps a combination of both.

Understanding the benefits of salaries and dividends can help founders and leadership teams with equity develop a compensation plan that supports both their personal financial needs and the long-term success of their organisation.

Pros of a Salary

  • Predictability: A budgeted salary will provide stability, for both leadership teams and their business. Allowing leaders to plan both their personal finances and start-up’s budget with confidence.
  • Fixed Business Costs: Set salaries for an organisation’s leaders are easier to account for in an organisation’ financial forecasting and budgets.

Pros of Dividends

  • Flexibility: Dividends allow for greater flexibility, particularly during periods of uneven cash flow.
  • Tying Compensation to Success: By taking dividends, you align your personal compensation with the financial health of your organisation.
  • Potential Tax Benefits: In some regions, dividends may be taxed at a lower rate than regular income.

Balancing the Two

For many biotech founders and leaders, a hybrid approach where a modest salary is combined with periodic dividends can strike a balance between personal financial stability and reinvestment in the company. 

Legal and Financial Considerations

When deciding between salary and dividends, you should consider the tax implications of how they choose to compensate themselves. In some cases, dividends may offer tax benefits for founders, while salaries are straightforward and predictable in terms of taxation, following the standard tax code for the region your organisation is based in.

It’s always wise to consult with a financial advisor or accountant who understands the unique dynamics of startup businesses, especially during the early days of scaling. Tailored guidance from a financial expert can help you optimise your compensation based on your personal and business goals, allowing you to balance financial freedom for themselves and their firms.

Securing Your Compensation

Compensating yourself as a biotech founder or company leader requires careful planning and timing. By understanding market trends, balancing salary with dividends, and tying your compensation to business milestones, you can ensure both personal and professional success.

Now is the time to review your current compensation and make sure it aligns with your business’s long-term goals. For founders and leadership teams looking to scale key functions within their organisation, HLX Life Science can help connect you with the talent you need to succeed and scale your biotech organisation. Contact us today to learn more about how we can support your organisation’s growth.