Once a startup grows through its early stages, the eternal question arises: how much should it pay its founders and first few employees?
Kruze Consulting, a CPA firm specializing in venture-backed startups, recently analyzed the average salary ranges of more than 450 early-stage startups and shared that data with TechCrunch.
The following averages are based on actual salary records, not survey responses, Kruze says.
Perhaps it’s no surprise that technical engineering/product positions tend to pay more than CEOs. One surprising thing is that people with the title COO/Operations tend to earn much higher salaries on average. The Operations/COO title is frowned upon because it may signal a third co-founder to the seed VC without a well-defined role. In a small company, there aren’t many operations to run. Even having that role can be a red flag for an early stage VC’s spend/budget.
Nonetheless, according to Kruze, the average salaries of founding executives are:
- CEO: $132,000
- CTO: $134,000
- COO/Operations: $135,000
- Product/CPO: $149,000
That’s not a very high salary, especially in the Bay Area, the land of startups. For example, Kruze also found that senior engineers join seed startups with salaries ranging from $180,000 to $235,000 in the Bay Area and $160,000 to $210,000 elsewhere. On the other hand, an entry-level engineer cannot command much money, averaging between $75,000 and $105,000, even in San Francisco.
It’s important to note that founders tend to make a healthy raise every time they raise money. The average salary for the Founder Executive category after Series A is $183,000, and for Series B it reaches $218,000.
According to Kruze, for positions with a low probability of becoming an entrepreneur, employee starting salaries for initial hires are as follows:
- Engineering, Intermediate: Bay Area: $100,000 to $145,000; $90,000 – $130,000 Other Technology Hub
- Sales, mid-level: Bay Area: $80,000 to $110,000; $70,000 ~ $100,000 Other
- Product Name: Bay Area: $130,000 to $185,000; $110,000 – $175,000 Other
- Marketing, mid-level: Bay Area: $100,000 to $175,000; $80,000 – $145,000 Other
Employees also tend to get equity. This is one of the attractions of joining a startup. Carta’s data, which covers more than 8,000 initial grants, shows how much the first five employees can expect, which tend to be awarded over four years.
- First hire: 0.5% to 4% equity (median 1.49%)
- second: 0.3% to 2% equity (median 0.85%)
- third: 0.21% to 1.2% equity (median 0.50%)
- fourth: 0.18% to 1% equity (median 0.44%)
- fifth: 0.13% to 0.8% equity (median 0.34%)
This story was originally published on December 2, 2024.
