Seed-Stage Founders’ Early Employee Salaries: Insights from Data on Compensation Ranging from $132K to $149K
After securing their seed round, startups often grapple with the important question: what salary should founders and their initial employees receive?
Kruze Consulting, a CPA firm with expertise in venture-backed startups, has conducted an analysis of average salary ranges for more than 450 seed-stage startups and shared these insights with TechCrunch.
According to Kruze, the following salary averages are derived from actual payroll data rather than survey responses.
It is perhaps not surprising that engineering and product roles generally earn higher salaries than the CEO. Interestingly, the average compensation for a COO or operations role is even higher, which raises eyebrows because this title can imply to seed VCs the presence of a third co-founder lacking a well-defined role — particularly in a small startup where operations may be minimal. Additionally, having this position might signal potential concerns about budgetary management to early-stage investors.
Nevertheless, here are the average salaries for founder executives as reported by Kruze:
- CEO: $132,000
- CTO: $134,000
- COO/Operations: $135,000
- Product/CPO: $149,000
These salaries are relatively modest, especially in startup-heavy regions like the Bay Area. For example, Kruze discovered that senior engineers entering seed startups fetch salaries ranging from $180,000 to $235,000 in the Bay Area, and between $160,000 and $210,000 in other locations. In contrast, entry-level engineers generally earn between $75,000 and $105,000, even in San Francisco.
It’s important to note that founders typically increase their salaries significantly with each funding round. The average compensation for founder executives jumps to $183,000 following Series A, and further rises to $218,000 by Series B.
In roles less likely to be held by founders, here are the starting salary ranges 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 in other locations
- Product titles: $130,000 to $185,000 in the Bay Area; $110,000 to $175,000 in other areas
- Marketing, midlevel: $100,000 to $175,000 in the Bay Area; $80,000 to $145,000 elsewhere
Equity is also a significant incentive for employees, which is one of the appealing aspects of joining a startup. Data from Carta, covering over 8,000 initial grants, reveals typical equity expectations for the first five hires, usually vested 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%)