After securing a seed round, startup founders often face the critical question of how much to compensate themselves and their initial employees.
Kruze Consulting, a CPA firm with expertise in venture-backed startups, has examined the average salary ranges across more than 450 seed-stage companies and shared their findings with StartupSuperb.
The following averages are derived from actual payroll data rather than survey responses, as claimed by Kruze.
It is perhaps expected that technical positions, such as engineers and product managers, generally command higher salaries compared to the CEO. Interestingly, the average salary for those in COO or operations roles is even higher. This may raise concerns for seed investors, as an operations title may imply a third co-founder without clear responsibilities, especially in a small startup where operations can be minimal. Such a position might also raise flags about budget management for early-stage VCs.
Here are the average salaries of founder executives, as reported by Kruze:
- CEO: $132,000
- CTO: $134,000
- COO/Operations: $135,000
- Product/CPO: $149,000
These figures may seem modest, particularly in competitive regions such as the Bay Area. For example, Kruze found that senior engineers joining seed startups earn between $180,000 and $235,000 in the Bay Area and between $160,000 and $210,000 in other technology hubs. In contrast, entry-level engineers in San Francisco earn an average of $75,000 to $105,000.
Founders typically increase their salaries with each funding round. The average compensation for founder executives rises to $183,000 after Series A and further to $218,000 following Series B.
For positions less likely to include founders, here are the starting salaries for initial hires, according to Kruze:
- Engineering, midlevel: $100,000 to $145,000 in the Bay Area; $90,000 to $130,000 in other tech hubs.
- Sales, midlevel: $80,000 to $110,000 in the Bay Area; $70,000 to $100,000 elsewhere.
- Product titles: $130,000 to $185,000 in the Bay Area; $110,000 to $175,000 in other regions.
- Marketing, midlevel: $100,000 to $175,000 in the Bay Area; $80,000 to $145,000 in other areas.
Employees typically receive equity as part of their compensation, which is a significant attraction of joining a startup. Data from Carta, encompassing over 8,000 initial grants, illustrates the equity expectations for the first five hires, which is generally vested over a four-year period.
- 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 originally published December 2, 2024.
