How Much Should Founders and Early Employees Earn Post-Seed Round?
You’ve just secured your seed funding, and now comes the big question: How much should you pay yourself and your initial team members? It’s a pivotal decision for any startup, especially in a competitive environment like the Bay Area. Kruze Consulting, a CPA firm with expertise in venture-backed startups, recently shed light on this topic by analyzing actual payroll data from over 450 seed-stage companies. The findings offer some intriguing insights.
It’s no shocker that technical roles in engineering and product development command higher salaries than the CEO role. However, an unexpected twist is that COOs or operations leaders often earn more than CEOs on average. This might raise eyebrows since an operations role might seem premature for a lean seed-stage company, potentially signaling to investors that there’s a co-founder without a clear function.
- CEO: Average salary tends to be lower than technical roles
- COO/Operations: Surprisingly high compensation, raising potential VC concerns
- Senior Engineers: $180,000 to $235,000 in the Bay Area
- Entry-Level Engineers: $75,000 to $105,000 in San Francisco
“In startups, it’s common for founders to adjust their salaries upwards with each funding round. Post-Series A, founder executives earn an average of $183,000, climbing to $218,000 by Series B.”
{Kruze Consulting}
In addition to salaries, equity remains a compelling incentive for early employees. Data from Carta reveals that the first five hires usually receive equity grants vested over four years. This prospect of ownership can be a strong draw for talent willing to take the plunge into startup life.
Ultimately, while initial salaries in startups might not be sky-high, especially when compared to established companies, the combination of competitive pay and equity potential makes these opportunities attractive for many aspiring professionals.
