Introduction

We're interested in estimating how much tech entrepreneurs earn, since it's one of our top recommended careers, and this is in part because it seems particularly high earning (enabling high donations, and potentially indicating the creation of a lot economic value). As part of this, we wanted to find out: if you can get into Y Combinator, how much will you earn? We're particularly interested in Y Combinator because it's the best known seed accelerator, and the data is available. In summary, here's what we found:

The total value of Y Combinator companies is $26 billion, of which the founders own $8 billion. Most of the returns have gone to a tiny minority of super-successes. The founders of AirBnB, Dropbox and Stripe are worth about US$7 billion, about 80% of all founders’ equity, although they account for 0.5% of the companies. Outside of the most successful companies, it was still possible to earn significant returns. 12% of companies from the first five years of Y Combinator are now worth US$40 million or more, and a further 10% have sold for US$5-40 million. The remainder probably earned little more than their (low) salaries. On average, founders from the first five years of Y Combinator are now worth US$18 million after 5-9 years, giving past average earnings of US$2.5 million per year When it invests in its companies, Y Combinator values them at US$1.7 million, of which each founding team owns $1.6 million. This implies that founders must earn (in cash or equity) substantially more than $100,000 per year on average. We expect the average earnings going forward to be less than $2.5 million per founder per year because of competitors to Y Combinator and regression to the mean. Y Combinator accept 2.5% of applications. Your personal expected earnings from applying to Y Combinator depend on your chance of being accepted and your chance of creating the next AirBnB or Dropbox.