Startup Salary Data from Private Company Compensation Survey

About This Blog

This site is for  entrepreneurs.  A full RSS feed to the articles is available.  Please subscribe so we know you're out there.  If you need more convincing, learn more about the site.



And, you can find me on Google+

Connect on Twitter

Get Articles By Email

Your email:


Blog Navigator

Navigate By : 
[Article Index]

Questions about startups?

If you have questions about startups, you can find me and a bunch of other startup fanatics on the free Q&A website:

Subscribe to Updates


30,000+ subscribers can't all be wrong.  Subscribe to the RSS feed.

Follow me on LinkedIn


Current Articles | RSS Feed RSS Feed

Startup Salary Data from Private Company Compensation Survey


It has been a while since I’ve written an article about startup compensation (what do founders, CEOs and others make)?  My previous article about startup founder compensation continues to be popular, despite having been written in 2006.salary compensation data

The data in this article is taken from which publishes a report titled “2008 Compensation & Entrepreneurship Report in IT”.  The report is based on a compensation survey.  This year’s report is based on 342 survey respondents representing 1,600 executives.  Note:  I am not affiliated with CompStudy.  I received the report for free, and I do not know what they charge for it.

Here are some points from the report that I found interesting. 

1.  This year’s survey was conducted between April and June 2008.

2.  31% of the executive population this year were founders in their companies (up from 28% in the prior year).

3.  CTOs and CEOs were the most frequent founders.

4.  Average base salary across all positions increased by 4.7% from 2007 to 2008. 

5.  On average, non-founding CEOs received a 5.4% grant.

6.  Outside of the CEO/President the non-founder Head of Technology holds the highest average equity percentage at 1.53%.

7.  Just 33% of the companies in the latest financing stages still have the founding CEO.

8.  For companies raising one or fewer rounds, the average founding CEO holds nearly one third of the equity.  After two rounds, this reduces to an average of 18%.

9.  Founding CTOs have 17.1% on average in companies with one or fewer financing rounds and 7.49% of companies with 2–3 financing rounds.

10.  CEO average base salary went from $227,000 to $237,000.

11.  Non-founder CEOs have greater total compensation ($339,000) than founding CEOs ($286,000).

12.  Founding CEOs hold an average of 22.05% of the company vs. non-founding CEOs which hold just 5.46%.

13.  The chairperson is the CEO of the company 56% of the time.

14.  Investors comprise more than half othe board of directors seats.  Outside board members comprise about 20% of the board.

So, what are your reactions to some of these data points?  What were you most surprised by? You can leave a comment here or discuss in the OnStartups community on LinkedIn (now with 30,000+ members).

Posted by Dharmesh Shah on Fri, Nov 14, 2008


Can you elaborate on Number 11 for this little Irish guy please? Reads the same to me but maybe I don't get it.

posted on Friday, November 14, 2008 at 10:38 AM by Steve

#10 is referring to the base salary (without bonuses). 
#11 is referring to total compensation (including salary, bonus and possibly other perqs) 

posted on Friday, November 14, 2008 at 10:52 AM by Dharmesh Shah

I think he meant for #11 that you say "Non-founder CEOs" versus "non-founding CEOs"...

posted on Friday, November 14, 2008 at 11:06 AM by Ace

Very interesting and very realistic I think on the equity points. CEO salaries around $237K for a startup.. I am assuming this is quite an advanced startup because I can't think of one - including ours - and we're funded! The main reason being, I could justify 5 billion other things to spend those $ on in startup phase and my investors wouldn't wear me pulling that salary at this stage. Be interesting to see this study for the 4th QTR.

posted on Friday, November 14, 2008 at 11:35 AM by Kate

Sorry about that. Problem in #11 now fixed.

posted on Friday, November 14, 2008 at 11:35 AM by Dharmesh Shah

#5 What does "grant" mean in this item? 
I'm English, so maybe "grant" is a US term for something in this context?

posted on Friday, November 14, 2008 at 3:30 PM by Stephen Kellett

Interesting data points that actually leaves me befuddled. I have heard many startups say "we are a great company with awesome potential and hence you have to take a paycut and we all have". But if this is what the top guys are making and the equity these folks are holding (and it has increased YoY) what are the folks in the trenches working for - if they have to take a paycut and lower equity? Is it just a bunch of baloney they are being told? 
Would love to hear perspectives on this - what am I missing?

posted on Saturday, November 15, 2008 at 1:44 PM by Gopal Shenoy

I am part of a founding team in a startup about to close funding. I am the principal architect for the startup. I have worked on this FT for 6 months without pay [as with the other founders]. What do you think would be a reasonable equity percentage for someone like me?

posted on Sunday, November 16, 2008 at 12:34 PM by San

This is interesting but seems only applicable to start-ups after they raised venture capital. I am 5-months into a start-up and spent about 2 months building a labor for equity framework which has allowed me to reach agreement with other founders on a market-based labor for equity exchange. The goal was to raise equity capital needed to attract and retain highly talented people, at varying levels of time commitment, for the first 12 months of company operations. Here are the assumptions underlying this framework: 
1. The company is now a pre-institutional start-up and has a 75% probability of securing an adequate amount of seed capital, from angel investors to launch our first product. 
2. The firm is an “average” start-up, having the same chance of success or failure as any other start-up, and will be valued, pre-money, at the start-up mean of $2.8MM in the angel round and 1,000,000 shares outstanding for $2.80/share.  
3.The fate of start-ups is: 40% return 5 or more times invested capital, 40% return 1-5 times capital, and 20% go out of business.  
4.The labor of highly talented people should be valued at the 75th-percentile of market rates for the positions they occupy.  
5.The most tax-efficient method of delivering equity to employees is through qualified at-the-money American call options with a 10-year expiration. 
6.The easiest and most broadly distributed and accepted method of pricing the value of stock options is the Black-Scholes method which assumes stock prices follow a random walk; an assumption we will adopt. 
7.In order to be eligible for employee stock options, we need employees… so, some part of employee compensation must come in the form of taxable wages. 
8.This framework does not attempt to price the illiquid nature of stock options in a private firm as compared with a public firm but adopts a comparatively short vesting schedule to improve liquidity.  
9.The volatility, or standard deviation of the historical prices of a venture-backed firm is calculated based on the average changes relative to the previous round.  
Once I ran the numbers through a Black-Scholes calculator, I found that value of an option is the value of the stock (because the volatility is >200%) so, we ended up swapping options for labor under this framework. I would not suggest trying to derive option value using bi or tri-nomial option pricing models, I found it akin to solving a Sedoku puzzle on steriods and in the end, you'll be the only one in the room who can understand what you did. At least people can find a B-S calculator on line and plug in the pricing and standard deviations themselves -  
This seems to be a more coherent way to divvy up equity than the way I did with my first start-up; which was essentially a wild guess at firm and labor value.  
Cheers, Devon

posted on Sunday, November 16, 2008 at 7:42 PM by Devon Kinkead

In rereading my above post, I don't think I was very clear with the practical application of all this so, let me try again with example. A 75th percentile VP of sales can earn, all in — and including insurances — about $300K/year. If this VP of sales agrees to work full-time and to take $20K in cash for the first year of employment, s/he is due $280K in equity or 100,000 shares at $2.80/share. You'll have to think about vesting schedules and repurchase terms under separation but, this is the basic idea in practice. I hope that's clearer and perhaps useful.  

posted on Monday, November 17, 2008 at 7:57 PM by Devon Kinkead

This is a good source for executive compensation data ... does anyone have any recommendations with regard to a source for similar types of information for the general employee at start-ups?

posted on Thursday, December 04, 2008 at 8:55 AM by Ann

I was asked to join a start-up as their CFO and I am looking for information on what type of compensation I should be looking for. The CEO is looking to close on their first round of financing within 30 days and the prototype is not yet complete. Based upon the above information it looks like I will draw very little if any cash salary and I can expect mostly options which as mentioned will get diluted in the next round of financing. Do I understand this correclty? I would welcome a conversation on this if anyone is interested.

posted on Monday, March 09, 2009 at 4:37 PM by Barbara

Barbara - re: "Based upon the above information it looks like I will draw very little if any cash salary and I can expect mostly options which as mentioned will get diluted in the next round of financing. Do I understand this correclty?" Yes, you do understand correctly. If you'd like to have a more detailed conversation around how much ownership you should reasonably expect - email me at Cheers, Devon

posted on Tuesday, March 17, 2009 at 9:12 AM by Devon Kinkead

This post was such perfect timing. Thanks so much. It's great to see that we as a start up have already done many of those things.  
I'm so glad I joined the OnStartup group through LinkedIn. 
I'm now in the process of reading through all your previous blogs and every single one resonates! 
You've made my day 

posted on Wednesday, April 08, 2009 at 2:00 PM by Natalie Sisson

This blog is so generous. It is amazing how much insight is shared. Thank you!

posted on Wednesday, April 22, 2009 at 11:59 PM by Mayo DeLeon

When I and my two business partners started KMD Science we had no market ready product, had invested over 700K in actual cash and in kind labor. Our initial compensation was 250K yr each which was below the norm for San Francisco Bay area start ups. Many VC's that we spoke with would have rather seen our compensation set to 150K and I had the distinct impression that they really wanted to see us work for free. Our coarse of action was to forget them and focus on getting strategic investors in our industry where the value of the principles was recognized. In doing so we gave up very little equity, shared development costs and share equally in the net.

posted on Wednesday, July 08, 2009 at 10:36 AM by Robert Keville

Comments have been closed for this article.