One of the biggest challenges for startup founders is figuring out how to pay themselves and their first hires. It’s more than a bit of a mystery for most first time founders – something I get a lot of questions about. Since payroll often eats up more than 75% of a startup’s operating expenses, getting compensation right can make or break a company’s runway.

That’s why I put together the Startup Compensation Guide—real, data-driven insights based on actual payroll records from hundreds of venture-backed startups. One of the more surprising takeaways? At the seed stage, CTOs often earn more than CEOs, reflecting the intense demand for technical talent. Founder salaries scale with funding rounds, starting around $132,000 at seed and rising to $218,000 by Series B.

For early employees, I found that compensation varies significantly based on role, experience, and location. Engineering hires are usually the first and most expensive additions to a startup team. In major tech hubs like San Francisco, salaries range from $75,000 for entry-level engineers to over $230,000 for top-tier talent, with slightly lower pay in other cities. Sales, product, and design roles follow a similar pattern, but cash compensation is only part of the equation—startups also need to budget for equity, benefits, payroll taxes, and one-time costs like equipment and software, which can add 25-35% to the total cost of hiring.

Equity remains a huge part of startup compensation, and my research showed that early employees typically receive between 0.5% and 4% ownership, with later hires getting progressively smaller grants. Most startups follow a standard four-year vesting schedule with a one-year cliff, ensuring long-term commitment while protecting the cap table. Balancing cash and equity is crucial—more experienced hires may require higher salaries, while early-stage startups need to preserve equity for future rounds. By structuring compensation thoughtfully, using 409A valuations, and leveraging cap table management tools, founders can build competitive pay packages that attract and retain top talent while keeping their startup financially healthy.