Is it true that startups raising today are doing so with smaller teams?
Very much yes.
Average headcount at startups on the day of fundraising has fallen 5%-30% since the first half of 2022, depending on the stage.
The general vibe of "smaller teams moving faster" is playing out in the data.
This is the net effect of both layoffs and reduced hiring across many early-stage companies. It also reflects a capital efficient mindset that has taken hold of even younger companies as they began their startup journeys in late 2022 or 2023.
Breakdown by stage:
𝗦𝗲𝗲𝗱
Avg headcount in 2022: 6.4
Avg headcount today: 5.3 (a drop of 16.2%)
𝗦𝗲𝗿𝗶𝗲𝘀 𝗔
Avg headcount in 2022: 16.5
Avg headcount today: 15.6 (down 5.5%)
𝗦𝗲𝗿𝗶𝗲𝘀 𝗕
Avg headcount in 2022: 57.8
Avg headcount today: 47.0 (down 18.7%)
𝗦𝗲𝗿𝗶𝗲𝘀 𝗖
Avg headcount in 2022: 118.6
Avg headcount today: 83.3 (down 29.8%)
Headcount in this case does include the founding team but does not include any employees who don't hold equity. I imagine that some companies have leaned into outsourcing some functions (consulting shops, part-time employees, etc). Fractional executives who receive equity would be counted in this analysis.
Bragging rights have very quickly moved from "total employees" to "revenue per employee". Remains to be seen if startups as an industry can hold on to this new financial rigor if the fundraising spigots ever turn back on - but it's healthier now.
A detailed deep-dive on all things startup teams, from salary to equity to hiring, out now in our State of Startup Compensation report. Shout in the comments for a direct link!
#startups #venturecapital #teamsize #founders
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