- Salaries make up around 75% of a startup's operating expenses, per an analysis by Kruze Consulting.
- The consultancy analyzed 450 VC-backed startups' payroll records to reveal employee salaries.
- An early-stage CEO makes around $132,000, while their technical cofounder is often paid more.
CEOs of American startups are seeing their salaries drop as the venture capital industry's cash crunch lingers.
Kruze Consulting, which provides accounting services to early-stage, VC-backed companies, released a study showing that the average seed-stage founder who is also a startup CEO makes $132,000 a year. This is down from $142,000 in Kruze's 2023 study.
The consultancy recently analyzed 450 of its seed-stage startup clients' payroll records to determine the average base salary for different jobs at early-stage companies. Kruze's study says that employee compensation accounts for around 75% of the total operating costs for its startup clients.
In addition to the base salaries analyzed by Kruze, equity is an important part of a startup employee's total compensation that can mean a financial windfall if a company is successful. The salaries in Kruze's study do not include equity-based compensation.
Kruze identified three buckets where seed-stage startups were likely to spend more money on talent: founders, early employees, and consultants. The study provided more detailed information on founder and early employee pay while noting that the average early-stage startup in its review spends 12.5% of its operating costs on consultancies.
Kruze also analyzed the one-time costs associated with hiring, such as equipment and training.
Founders and executives
The average seed-stage founder is likely to be making less than what other people on the leadership team are making. A technical co-founder acting as the startup's chief technology officer earns, on average, a slightly higher salary, at $134,000.
The chief operating officer and chief product officer make $135,000 and $149,000 per year, respectively.
The salary difference accounts for the greater technical expertise the CTO, COO, and CPO are likely bringing to the table, the Kruze study found.
Founder salary increases to an average of $183,000 when a startup closes its Series A funding round and bumps up to an average of $218,000 when a startup hits its Series B, according to Kruze's data.
Early employees
Kruze's data showed that after getting funding, most many-stage startups begin by hiring more engineers, followed by designers, product managers, salespeople, and marketers.
Engineers
Engineering compensation can vary greatly, depending on a person's technical expertise and experience with AI and machine learning and where in the country they're based. According to Kruze's analysis of its early-stage startup payrolls, engineers can make anywhere between $65,000 and $235,000 annually.
| San Francisco Market | Other Major Tech Hubs (e.g., Austin) | |
| Entry Level | $75,000 - $105,000 | $65,000 - $95,000 |
| Mid-level | $100,000 - $145,000 | $90,000 - $130,000 |
| Senior | $140,000 - $185,000 | $125,000 - $162,000 |
| Very senior | $180,000 - $235,000 | $160,000 - $210,000 |
Sales
Startups usually start hiring sales teams after they achieve early product-market fit, the Kruze study found. Their total compensation typically includes a base salary plus commission, the latter of which could double base salary — which, depending on seniority and location, could be anywhere from $45,000 to $150,000.
| San Francisco Market | Other Major Tech Hubs (e.g., Austin) | |
| Entry Level | $50,000 - $80,000 | $45,000 - $72,000 |
| Mid-level | $80,000 - $110,000 | $70,000 - $100,000 |
| Senior | $110,000 - $135,000 | $95,000 - $120,000 |
| Very senior | $120,000 - $150,000 | $110,000 - $135,000 |
Product and Design
Product and design teams can include a wide range of employees, some of whom are skilled engineers with experience working in Big Tech. Depending on seniority, job function, and location, Kruze's data showed that product team members could make anywhere from $70,000 to $185,000.
| San Francisco Market | Other Major Tech Hubs (e.g., Austin) | |
| Product | $130,000 - $185,000 | $110,000 - $175,000 |
| Junior Designer | $80,000 - $150,000 | $70,000 - $130,000 |
| Senior Designer | $100,000 - $172,000 | $99,000 - $155,000 |
Marketing and Operations
Startups take varying approaches to building out their marketing and operations teams, with some hiring talent early on and others waiting until later in the company life cycle to bring people on. The Kruze study found that this contributed to a wide salary band for this group of employees — from $39,000 annually for a junior employee to as much as $325,000 for the top role.
| San Francisco Market | Other Major Tech Hubs (e.g., Austin) | |
| Head of Marketing | $200,000 - $325,000 | $150,000 - $270,000 |
| Mid Level Marketing | $100,000 - $175,000 | $80,000 - $145,000 |
| Customer Support | $65,000 - $100,000 | $60,000 - $94,000 |
| Assistant | $50,000 - $150,000 | $39,000 - $75,000 |
Other costs
While payroll is a huge part of a startup's operating expense, salary isn't the only line item associated with hiring and retaining talent. The Kruze study found that early-stage startups spent an additional 10% of base compensation per employee on payroll taxes and required benefits, including unemployment, workers' compensation, and federal, state, and local payroll taxes.
Additionally, early-stage startups add another 15-25% of base compensation per employee on optional benefits, namely health insurance, in addition to 401K contributions, paid time off, and life insurance.
Equipment such as laptops and work stations cost startups between $2,500 and $3,000 per employee, Kruze's data found. Startups are also paying for software licenses, onboarding and training. Based on its analysis, Kruze recommends that startups looking to hire should budget between 25-35% higher than the base salary to account for additional costs, noting that certain cities and states might be more expensive than others.