Once a startup has raised its seed round, the perennial question becomes how much should the founders pay themselves and their first few employees?
Kruze Consulting, a CPA firm that specializes in venture-backed startups, recently analyzed average salary ranges for over 450 seed-stage startups and shared that data with TechCrunch.
The following averages are based on actual payroll records, not survey responses, Kruze says.
Perhaps unsurprisingly, technical engineering/product positions tend to be paid more than the CEO. One surprise is that a person with a title of COO/operations also tends to be paid even higher, on average. That’s eyebrow-raising because an operations/COO title could signal to your seed VCs a third co-founder without a well-defined role — there are not a lot of operations to run in a tiny company. Even having that role can be a red flag on spending/budget to early-stage VCs.
Nevertheless, here are the average salaries of founder executives, according to Kruze:
- CEO: $132,000
- CTO: $134,000
- COO/Operations: $135,000
- Product/CPO: $149,000
Those are not particularly high salaries, especially in the land of startups, the Bay Area. For instance, Kruze also found that very senior engineers enter seed 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 as 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 pay in the founder executive category after the Series A is $183,000, and by Series B, it reaches $218,000.
In titles less likely to be a founder, here are employee starting salaries for initial hires, according to Kruze:
- Engineering, midlevel: $100,000 to $145,000 Bay Area; $90,000 to $130,000 other tech hubs
- Sales, midlevel: $80,000 to $110,000 Bay Area; $70,000 to $100,000 other
- Product titles: $130,000 to $185,000 Bay Area; $110,000 to $175,000 other
- Marketing, midlevel: $100,000 to $175,000 Bay Area; $80,000 to $145,000 other
Employees also tend to get equity — that’s one of the allures of joining a startup. Data from Carta covering over 8,000 initial grants shows how much the first five hires can expect, which tends to be 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%)