One chart can sometimes tell the whole story - in this case about startup compensation in the US.
Orange line = change in average startup salary.
Black line = change in average startup equity.
This data shows that for the average startup employee hired today, salary is likely just slightly above where it would have been in Nov 2022 for the same position.
That's not great - but given all the layoffs and hiring downturn and turmoil since 2022, it's not terrible.
(not keeping pace with inflation, sure, but not terrible).
The picture in equity is dramatically different. The average equity package is down nearly 38% over the same timeframe.
And no, this is not due to company valuations being lower these days (though many companies have had to take down rounds). This means if an employee hired in Nov 2022 received 100 ISOs in their equity grant, an employee hired today into the same role would likely receive 62 ISOs.
Major shift!
𝗪𝗵𝘆?
1. Supply and demand in startup employment favors the employer right now. Many qualified candidates on the market, fewer hires happening overall = more leverage to companies in the negotiations.
2. Scrutiny on the option pool burn is higher now than in the past (from execs, from investors, etc).
3. It's much easier to lower equity grants than salary. The recent wave of compensation transparency doesn't really involve equity at all and many candidates walk in with less of a sense of what "fair" looks like for their equity package.
4. Some candidates are probably choosing to take slightly higher salaries in exchange for lower equity, when possible. Or they may be asking for that sort of trade-off in the hiring discussions.
I'm personally optimistic for 2025 on both the hiring and compensation fronts. It won't be a return to boom times, but I do hope the picture improves.
PS - if you're applying for a startup job right now, give me a wave in the comments and I'll link you to free info on what startups are paying in salary and equity at this very moment. Walk into those negotiations prepared with data!
#startups #salary #equity #founders #compensation #startupcomp
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