Once a startup has taken root, the perennial question becomes how much should the founders pay themselves and their first employees?
Kruze Consulting, a CPA firm that specializes in venture-backed startups, recently analyzed the average salary ranges for over 450 early-stage startups and shared that data with TechCrunch.
The averages below are based on actual payroll data, not survey responses, Kruze says.
Perhaps surprisingly, technical/product engineering positions tend to be paid more than CEOs. One surprise is that someone with a COO/operations title tends to be paid even more, on average. This is surprising, because an operations/COO title might signal to your startup VCs a third co-founder without a well-defined role—there aren't many operations to run at a small company. Even having that role can be an expense/budget red flag for early stage VCs.
However, here are the average founder CEO salaries, according to Kruze:
- CEO: $132,000
- CTO: $134,000
- COO/Operations: $135,000
- Product/CPO: $149,000
Those aren't particularly high salaries, especially in startup country, the Bay Area. For example, Kruze also found that very senior engineers enter startups with salaries ranging from $180,000 to $235,000 in the Bay Area and $160,000 to $210,000 in other areas. An entry-level engineer, on the other hand, even in San Francisco, can't command that much: $75,000 to $105,000 on average.
It should be noted that founders tend to give themselves healthy raises with each round they raise. The average salary in the executive category of the founder after Series A is $183,000 and from Series B, it reaches $218,000.
In the less likely titles to be a founder, here are the starting salaries of employees for initial hires, according to Kruze:
- Engineering, Intermediate Level: $100,000 to $145,000 Bay Area; $90,000 to $130,000 other tech centers
- Sales, mid-level: $80,000 to $110,000 Bay Area; Another $70,000 to $100,000
- Product titles: $130,000 to $185,000 Bay Area; Another $110,000 to $175,000
- Marketing, Intermediate Level: $100,000 to $175,000 Bay Area; $80,000 to another $145,000
Employees also tend to get equity—that's one of the allures of joining a startup. Data from Carta covering more than 8,000 startup grants shows how much the first five hires can expect, which tend to be awarded over four years.
- First job: 0.5% to 4% equity (median 1.49%)
- Second: 0.3% to 2% equity (average 0.85%)
- The third: 0.21% to 1.2% equity (average 0.50%)
- Fourth: 0.18% to 1% equity (average 0.44%)
- Fifth: 0.13% to 0.8% equity (median 0.34%)
This story originally published on December 2, 2024.
