Seed Stage Employee Compensation: What Founders Pay

Founder and Early Employee Compensation at Seed-Stage Startups

A common concern for startups following a seed funding round is determining appropriate salaries for founders and initial team members.

Kruze Consulting, a CPA firm specializing in venture capital-backed companies, recently conducted an analysis of salary data from over 450 seed-stage startups. This information was then shared with TechCrunch.

The reported averages are based on actual payroll records, ensuring a high degree of accuracy, according to Kruze.

Salary Expectations by Role

It’s perhaps not surprising that technical and product-focused roles generally command higher compensation than the Chief Executive Officer position. Interestingly, the role of Chief Operating Officer (COO) or Head of Operations often receives even greater pay, on average.

This can be noteworthy, as a COO/Operations title in a very early-stage company might signal to seed investors the presence of a third co-founder lacking a clearly defined function. A lack of substantial operational needs in a small startup can raise concerns for early-stage VCs regarding spending and budgetary control.

Here are the average annual salaries for founder-level executives, as reported by Kruze:

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

These figures are relatively modest, particularly within the startup ecosystem and especially in high-cost areas like the Bay Area.

Kruze’s data also indicates that experienced engineers joining seed-stage startups can expect salaries between $180,000 and $235,000 in the Bay Area, and $160,000 to $210,000 in other locations. Entry-level engineers, even in San Francisco, typically earn between $75,000 and $105,000 annually.

Salary Growth with Funding Rounds

Founders generally receive salary increases as the company secures subsequent funding rounds. Following a Series A round, average founder executive pay reaches $183,000. By the time of a Series B round, this figure increases to $218,000.

Starting Salaries for Initial Hires

Below are the average starting salaries for non-founder employees, as compiled by 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)

Equity Grants for Early Employees

In addition to salary, employees are often offered equity as part of their compensation package – a significant draw for joining a startup. Analysis of over 8,000 initial equity grants by Carta reveals typical equity allocations, which are generally vested over a four-year period.