Image of a person working on a laptop

For startups, employee compensation costs typically consume over 75% of total operating expenses. As startup accountants who help founders manage their runway and cash flow, we know that making smart pay decisions is one of the most important activities at the earliest-stage. This startup compensation guide provides real compensation data from hundreds of venture-backed startups’ actual payroll records, not survey responses. This startup compensation guide is very focused on the most common roles startups will hire for at the very earliest stages, such as engineering, sales and marketing, and design. And founders!

While Kruze has many clients that have raised hundreds of millions in funding, the non-founder roles listed in this compensation guide are based on the first hires a company makes - this is where we get the most questions, and where founders have the fewest resources to try to understand how to compensate their hires. Later-stage companies often pay more cash comp, and founders running later-stage businesses can turn to recruiters and their HR team for help figuring out how much to pay.

Early-Stage Startup Compensation Guide by Role

When it comes to compensation, early-stage startups typically have three major categories of salary expenses to consider.

  1. Founder Compensation: Usually the first salary expense after raising funding
  2. Early Employee Compensation: The critical first hires that help build the initial product and go-to-market
  3. Consultants: Many startups use consultants early in their life; this will greatly vary by the individual startup, in our client base consulting costs represent about 12.5% of operating costs

Let’s start with founder compensation.

Founders

Based on our analysis of over 450 funded startups in 2024, here’s what seed-stage founding teams are paying themselves:

  • CEO: $132,000
  • CTO: $134,000
  • COO/Operations: $135,000
  • Product/CPO: $149,000

It’s not unusual for the earliest-stage companies to compensate founder CTOs higher than CEOs – that’s not a typo. This is because, in many industries, finding a founding technical founder is a lot harder than finding a CEO.

Founder numbers increase with additional funding. At Series A, the average increases to $183,000, and by Series B, reaches $218,000. You can read our entire founder salary report, or check out our annual Startup CEO Salary Report.

Founder Compensation Calculator

This is basically our world-famous CEO Salary Calculator – use it to put in your capital raised, stage, industry and months of runway to get an estimate of how much compensation is typical across funded startups in the US.

  Redirecting to results  

Early-Employee Compensation

Early-employee cash compensation varies significantly based on role, experience, location and the startup’s funding level. We’ve analyzed actual payroll data from hundreds of funded startups to determine the typical ranges we see across the most common early hires. Most of our non-biotech clients hire engineers very early after getting funding, then designers, product people, and sales and marketing are typically added quickly.

Engineering Team

Engineering is typically one of the first and most crucial hiring areas. Obviously the compensation is going to vary widely based on the type of engineer – for example, at the moment, experienced AI/ML hires are incredibly expensive. At the risk of over-generalizing, here are the cash salary ranges based on experience level for engineers that we see in our clients’ payroll systems:

Engineering – San Francisco Market

  • Entry Level: $75,000 - $105,000
  • Mid Level: $100,000 - $145,000
  • Senior: $140,000 - $185,000
  • Very Senior: $180,000 - $235,000

Engineering – Other Major Tech Hubs (e.g., Austin)

  • Entry Level: $65,000 - $95,000
  • Mid Level: $90,000 - $130,000
  • Senior: $125,000 - $162,000
  • Very Senior: $160,000 - $210,000

Sales Team

Sales compensation typically includes both base salary and commission. The OTE (a sales slang term meaning “on target earnings”) is usually double the base salary. Many startups hire sales talent after they’ve achieved early product-market fit. Here are the base salary ranges:

Sales – San Francisco Market

  • Entry Level: $50,000 - $80,000
  • Mid Level: $80,000 - $110,000
  • Senior: $110,000 - $135,000
  • Very Senior: $120,000 - $150,000

Sales – Other Major Tech Hubs

  • Entry Level: $45,000 - $72,000
  • Mid Level: $70,000 - $100,000
  • Senior: $95,000 - $120,000
  • Very Senior: $110,000 - $135,000

Product & Design

Product managers and designers are often hired after the core engineering team is in place. Product is an incredibly wide range of possible hires, some of which have serious engineering chops, some of which come from highly paid companies like Apple, and others of which are junior hires just learning product. Here are the typical ranges:

Product & Design – San Francisco Market

  • Product: $130,000 - $185,000
  • Junior Designer: $80,000 - $150,000
  • Senior Designer: $100,000 - $172,000

Product & Design – Other Major Tech Hubs

  • Product: $110,000 - $175,000
  • Junior Designer: $70,000 - $130,000
  • Senior Designer: $99,000 - $155,000

Marketing & Operations

The point at which marketing and operations team members are hired early in a startup’s lifecycle varies greatly. More operationally complex companies will bring on operations like customer support or office managers/assistants very early. Because the timing of marketing hires has a broad range, it’s not easy to nail down the precise point where marketing employees are usually hired. For some startups it depends on founder preference, and for others it’s based on need or amount of funding.

Marketing & Operations – San Francisco Market

  • Head of Marketing: $200,000 - $325,000
  • Mid Level Marketing: $100,000 - $175,000
  • Customer Support: $65,000 - $100,000
  • Assistant: $50,000 - $150,000

Marketing & Operations – Other Major Tech Hubs

  • Head of Marketing: $150,000 - $270,000
  • Mid Level Marketing: $80,000 - $145,000
  • Customer Support: $60,000 - $94,000
  • Assistant: $39,000 - $75,000

Cash isn’t the only form of compensation that early startup employees expect – payroll taxes, benefits and other costs associated with compensation are real factors that founders need to think carefully about as they shape their hiring plans. And other items creep into payroll costs like your payroll software – this can all add up.

Additional Startup Employee Compensation Costs

Beyond base salary and equity, startups need to budget for significant additional compensation-related costs:

Payroll Taxes & Required Benefits (typically adds ~10% to base compensation):

  • Federal payroll taxes (Social Security, Medicare)
  • State-specific unemployment insurance
  • Workers’ compensation insurance
  • State disability insurance (in some states)
  • Local payroll taxes (in some cities)

Optional Benefits (typically adds 15-25% to base compensation):

  • Health insurance (biggest optional benefit cost)
  • Dental and vision insurance
  • 401(k) plans and matching
  • Life and disability insurance
  • PTO and vacation time

One-Time Costs:

  • Equipment (laptops, monitors): $2,500-3,000 per employee
  • Software licenses
  • Onboarding and training costs

When budgeting, we typically recommend planning for total compensation costs to be about 25-35% higher than base salary. This varies significantly by location and benefits package – San Francisco employers typically pay higher payroll taxes and benefits costs than employers in other cities.

Another major part of startup compensation is equity.

Early-Employee Equity Compensation

Let’s discuss the amount of equity that the earliest employees typically get. This equity is a crucial part of a startup compensation package, as it provides significant upside potential if the company succeeds. It also helps align employee incentives with the long-term success of the startup. Equity packages are often quite customized, and any particular employee may merit a much larger (or smaller) equity amount based on their experience. Read our guide to setting up an option plan here.

Based on recently analyzed data by Carta (the cap table provider) from over 8,000 initial grants at tech startups, here’s what is typical for equity grants to the first employees.

  • First hire: 0.5% to 4% equity (median 1.49%)
  • Second hire: 0.3% to 2% equity (median 0.85%)
  • Third hire: 0.21% to 1.2% equity (median 0.50%)
  • Fourth hire: 0.18% to 1% equity (median 0.44%)
  • Fifth hire: 0.13% to 0.8% equity (median 0.34%)

The most generous founding teams (90th percentile) grant their first five hires a combined 17.56% of the company, while more conservative teams (25th percentile) grant a combined 1.32%. The median founding team grants about 3.62% total equity to their first five employees.

After the first five hires, equity grants typically decrease significantly. By the tenth hire, the median grant drops to 0.18%. This makes sense – early employees take on more risk and typically accept below-market cash compensation in exchange for more equity upside.

Some important considerations when planning your equity compensation:

  1. The more funding you’ve raised, the less equity you’ll typically need to grant (since you can offer higher cash compensation)
  2. Technical hires often command higher equity grants than non-technical roles
  3. More experienced hires usually expect larger equity packages
  4. Your option pool needs to be large enough to support 18-24 months of hiring – VCs will expect this during fundraising. You can learn about option pool modeling here.

Startup Employee Equity Compensation: Vesting 101

Equity is incredibly precious at early-stage companies. And not every employee works out – so a vesting schedule is a great way to protect the company from having a lot of “dead” equity on the cap table. Most early-stage startups use a standard equity compensation vesting schedule to incentivize employees to stick around for multiple years and to avoid having a lot of the company owned by people no longer working there. Here’s how typical startup equity vesting works:

  • Four-year vesting period
  • One-year cliff (meaning no equity vests until the first work anniversary)
  • After the cliff, equity vests monthly
  • Sometimes there is “double-trigger” acceleration if there is an acquisition

For example, if an employee is granted 1% equity compensation, here’s how it typically vests.

  • Year 0-1: 0% (nothing vests until the cliff)
  • At 1 year: 25% vests (0.25% in this example)
  • Months 13-48: The remaining 75% vests in equal monthly installments (approximately 0.021% per month)

The one-year cliff is important – it means that if an employee leaves before their first anniversary, they get no equity. This protects the company from having to manage tiny equity stakes from employees who don’t work out in the first year. Even if you are using a cap table software (which you 100% should be doing), managing tons of tiny little equity holders is a pain. You don’t want to have to chase around too many signatures etc. and you open yourself up to more liability since there are more people who could sue you.

Some startups offer accelerated vesting if the company is acquired. This is more likely offered to senior hires. The most common version is “double-trigger” acceleration, which means:

  1. The company is acquired (“first trigger”)
  2. The employee is terminated without cause within a certain period (“second trigger”)

This startup compensation structure gives employees some protection in acquisition scenarios while not making the company less attractive to acquirers.

409A Valuations and Startup Compensation

When offering equity compensation, startups need to ensure they’re granting options at fair market value to comply with IRS regulations. This means having a 409A valuation performed by a qualified third party. This valuation sets your company’s common stock price, which determines the strike price of the options you grant to employees.

You’ll need your first 409A valuation before you start granting employee options. Understanding typical 409A valuation costs can help you budget appropriately, especially since valuations typically need to be updated:

Getting this wrong can have serious tax implications for your employees. So work with an accredited valuation provider. And remember to have the board quickly approve option grants when you make a new hire. You don’t want a new hire waiting months to officially get their options, as they may end up with a higher strike price if the company raises money.

Cash vs. Equity Compensation Trade-offs

When structuring startup compensation packages for early employees, startups need to balance their limited cash runway against the need to preserve equity for future hires. The basic rule of thumb is that more cash compensation means less equity, and vice versa. However, the balance varies significantly by role and candidate experience.

More experienced hires often have higher cash requirements due to personal obligations like mortgages and families. We’ve seen some founders try to balance out the cash compensation by lowering equity - this doesn’t always work for highly experienced early-employees, who know what they are worth. Technical roles often command both higher cash and equity due to intense market demand, particularly for specialized skills like AI/ML.

Some roles have traditional compensation structures that you’ll need to work within. Sales roles, for example, are typically more cash-heavy with compensation heavily weighted toward commission. However, early sales hires might still receive meaningful equity packages if they’re taking a risk on an unproven product.

The amount of funding you’ve raised also impacts this balance. As you raise more capital, you can typically weigh compensation more toward cash and less toward equity. This makes sense – the company has less risk for new hires, and you need to preserve equity for future rounds and hires. And, in theory, each share and percent of equity should be worth more since the company’s valuation is going up.

Creating Your Early-Stage Startup Compensation Strategy

Creating the right compensation structure is one of the most important and challenging aspects of building a startup. It’s the people that will make or break your success. This startup compensation guide provides real-world data to help you make informed decisions about both cash and equity packages. Remember that every startup is unique – use these ranges as a starting point, then adjust based on your:

  • Available funding and runway
  • Industry and technical requirements
  • Geographic location and remote work strategy
  • Stage of growth and hiring priorities
  • Specific candidate experience and negotiating leverage

The most successful startups create clear compensation philosophies early, document their decisions, and stay consistent while remaining flexible enough to adapt to changing market conditions. They balance the need to preserve cash and equity while still building competitive packages that can attract and retain top talent.

Most importantly, don’t try to save money by skimping on important infrastructure around compensation – use a cap table management system, get your 409A valuations done on time, and work with qualified accountants and lawyers to ensure you’re handling payroll taxes and equity grants correctly. Making mistakes in these areas can be extremely costly to fix later.

Want to learn more about managing your startup’s finances? Contact us to discuss how we can help with compensation planning, equity management, and other accounting needs.