Valuations may be starting to drop, but founders needn’t worry. After all, values are not everything.
Over the past two years, the value of private companies has increased, but that doesn’t mean founders are taking home more money. In fact, they sometimes earn less.
Data from J.Thelander Consulting, collected from more than 2,000 private companies, shows that, over the past three years, the median total cash taken home by CEOs was actually come down when the company’s valuation increased to $130 million from $90 million (Total cash is the combination of base salary and bonuses). Meanwhile, those CEOs also gave away larger stakes in the company in 2021 and 2022 as their company’s valuation increased.
Here’s a look:
It’s not a perfect rule: Total cash is largely recovered when valuations climb above $200 million. But the data serves as an important reminder, especially now—when valuations are in the early stages of a decline—that valuations don’t necessarily translate to financial success.
“As reflected in the market, valuations are subjective and not a reliable barometer for determining compensation,” Jody Thelander, CEO and founder of J.Thelander Consulting, told me in an email.
That said, funding rounds do tend to be an important indicator for salary increases—and the checks written by VCs have become smaller.
CEOs and top executives always get a financial boost after companies get more funding from venture capitalists. “In all cases, total founder and non-founder money increases as financing increases,” Thelander said.
A fall in valuations may not have a drastic impact on CEO compensation. A significant decrease in funding could.
Overall, compensation has been increasing for CEOs and top employees since 2020, as companies have struggled to retain their talent and used everything from base pay, equity, and bonuses to retain them, according to to Thelander.
Will that continue? It’s hard to tell when companies lay off workers en masse. At the same time, the unemployed don’t seem to be having much trouble finding a new gig.
A programming note… In celebration of Labor Day, you won’t get a Term Sheet in your inbox Monday. Enjoy the long weekend, and see you in a few days.
Until then,
Jessica Mathews
Twitter: @jessicakmathews
Email: [email protected]
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Jackson Fordyce has curated the deals section of today’s newsletter.
VENTURE DEALS
– Alloya New York-based identity decision platform for banks and fintech, has raised an additional $52 million in funding. Lightspeed Venture Partners and Avenir Growth led the round and was joined by investors including Cannabis Ventures, Bessemer Venture Partners, Avid Venturesand Felicis Ventures.
– OneSignala customer engagement platform based in San Mateo, Calif., has raised $50 million in Series C funding. BAM Elevate led the round and was joined by investors including Agile Partner, SignalFireand Zach Coelius.
– PROOFan NFT-focused podcast and events platform based in Los Angeles, has raised $50 million in Series A funding. A16z crypto led the round and was joined by investors including Seven Seven Six, True Ventures, Collab+Currency, Flamingo DAO, SV Angeland VaynerFund.
– Fairmarketa Boston-based automated sourcing platform, has raised $35.6 million in Series C funding. OMERS Growth Equity led the round and was joined by investors including GGV capital city, Vision Partners, HighlandXand Service Today.
– landaa New York-based real estate investment firm, has raised $25 million in Series A funding. NFX, 83 Northand Viola Ventures invested in rotation.
– Apricitya virtual fertility clinic based in London, has raised €17 million ($16.91 million) in Series B funding. MTIP led the round and was joined by Iris Ventures.
– learnsofta San Diego-based learning and talent platform, has raised $16.7 million in Series A funding led by Elsewhere Partners.
– FX HedgePoola London and New York-based peer-to-peer matching platform for foreign exchange transactions, has raised $8 million in Series A funding. information Venture Partners led the round and was joined by investors including Fidelity International Strategic Ventures and NAventures.
– very beautifula Dallas-based beauty brand, has raised $4 million from Pendulum.
– Haru Investa digital asset management platform based in Singapore, has raised $4 million in funding led by the executive chairman of Cocone Corporation Chun Yang-Hyun.
– PsychAppsa mental health video game developer based in London, has raised £1.5 ($1.73 million) in seed funding from Morningside Ventures.
PRIVATE EQUITY
– CIVC Partners got a majority stake in OTR Transportation, a freight broker based in Chicago. Financial terms were not disclosed.
– Fortis Solutions Groupa portfolio company of funds managed by Harvest Partnersgot Digital Dogma Corp, a Santa Fe Springs, Calif.-based labels, shrink sleeves, and packaging digital manufacturer. Financial terms were not disclosed.
– An affiliate of HIG Capital got CPS Development Services, a mechanical and electrical service provider in Cambridgeshire, UK. Financial terms were not disclosed.
– PayrHealthsupported by Capital city of Osceolagot Supero Healthcare Solutions, an Austin-based enrollment and credentialing provider company. Financial terms were not disclosed.
– Funds advised by SK Capital Partners and Edgewater Capital Partners agreed to take over the scintillation and photonic crystals business Saint-Gobain, a Hiram, Ohio-based provider of crystals for radiation detection applications. Financial terms were not disclosed.
– Technical Safety Servicesa portfolio company of LLCPgot CEPA Operations, an Ontario, Calif.-based regulatory certification service provider. for controlled environment equipment for pharmaceutical and healthcare settings. Financial terms were not disclosed.
OUT
– Gridiron got a majority stake in Magneto and Diesel Holdingsa distributor and remanufacturer of aftermarket parts and components for diesel-powered engines based in Humble, Texas, from Warren Equity Partners. Financial terms were not disclosed.
DIFFERENT
– Novo Nordisk agreed to take Form Therapeuticsa Watertown, Mass.-based rare blood disorder and sickle cell disease treatment company, for about $1.1 billion.
– Carta got Capdesk, a London-based equity management platform. Financial terms were not disclosed.
– HTEC got Mistral Technology, a product development software company in Sarajevo, Bosnia. Financial terms were not disclosed.
– Instacart got Eversight, a Palo Alto-based pricing and promotions platform for CPG brands and retailers. Financial terms were not disclosed.
– Measurabl got WegoWise, a software platform based in Santa Barbara, Calif. for utility and residential real estate data automation. Financial terms were not disclosed.
– Smartsheet got clothing, a brand management, template and creative automation platform based in Brisbane. Financial terms were not disclosed.
FUND + FUND FUND
– Cantos Venturea San Francisco-based venture capital fund, has raised $50 million for a third fund focused on pre-seed and seed-stage investments in climate, TechBio, aerospace, and computing startups.
PEOPLE
–AE Industrial Partnersa private equity firm based in Boca Raton, Fla., promoted Tyler Rowe to the principal and Austen Dixon, Graham Cantorand Eugene Kim to the vice president.
– CenterOak Partnersa private equity firm based in Dallas, which was hired Mark Langer as a managing director. Before, with him Heartwood Partners.
– Founders Funda San Francisco-based venture capital firm, hired Sam Blond as a partner. Before, with him Brex.
– ICGa London-based alternative asset manager, hired Andrea Serra as the european head for ICG strategic equity. Before, with him Black stone.