$132K – $149K This is how much seed stage founders pay early employees, based on data
Once a startup raises its seed round, the perennial question is how much should founders pay themselves and their first few employees?
Cruz Consultinga CPA firm specializing in venture-backed startups, recently analyzed the average salary ranges of more than 450 seed-stage startups and shared that data with TechCrunch.
The following averages are based on actual payroll records, not survey answers, Cruz says.
Perhaps not surprisingly, technical/product engineering jobs tend to pay more than CEO jobs. One surprise is that someone with the COO/Operations title also tends to have higher pay on average. This is surprising because the title of COO/COO could refer to your core VC founders as a third co-founder without a well-defined role – there aren’t a lot of operations that can be run in a small company. Even having this role can be A red flag for early stage VC spending/budgeting.
However, here are the average salaries of founding CEOs, according to Cruz:
- CEO: $132,000
- Technology Manager: $134,000
- Director of Operations/Operations: $135,000
- Product/purchase cost: $149,000
These aren’t particularly high salaries, especially in the land of startups, the Bay Area. For example, Cruz also found that senior engineers enter startups with salaries ranging from $180,000 to $235,000 in the Bay Area, and from $160,000 to $210,000 in other regions. On the other hand, an entry-level engineer, even in San Francisco, can only make $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 pay for founder CEOs after Series A is $183,000, and at Series B it is $218,000.
In titles less likely to be established, here are the starting employee salaries for initial hires, according to Cruz:
- Engineering, intermediate level: Bay Area $100,000 to $145,000; $90,000 to $130,000 for other technology centers
- Sales, mid-level: Bay Area $80,000 to $110,000; Another $70,000 to $100,000
- Product titles: Bay Area from $130,000 to $185,000; Another $110,000 to $175,000
- Marketing, intermediate level: Bay Area $100,000 to $175,000; Another $80,000 to $145,000
Employees also tend to have equity, which is one of the lures of joining a startup. Data From Carta Covering more than 8,000 initial grants shows how much the top five employees can expect, which tends to be awarded over four years.
- First rental: 0.5% to 4% of equity (average 1.49%)
- second: 0.3% to 2% of shareholders’ equity (average 0.85%)
- third: 0.21% to 1.2% of shareholders’ equity (average 0.50%)
- Fourth: 0.18% to 1% of shareholders’ equity (average 0.44%)
- Fifth: 0.13% to 0.8% of equity (average 0.34%)
This story was originally published on December 2, 2024.
