Compensation Trends & Mistakes to Avoid

Your comp strategy affects who you attract, who stays, and how much runway you burn. Getting it wrong can lead to churn, morale issues, or overspending before product–market fit.

Why it Matters

Early-stage compensation needs to be competitive, flexible, and legally compliant. Founders often underprice roles, ignore equity dynamics, or misalign incentives.

Founders Checklist

Benchmark roles using startup-specific data (e.g., Carta, Pave, OpenComp)
Be transparent about cash/equity tradeoffs — especially early on
Document salary + equity offers in writing (offer letter + equity grant)
Refresh equity grants for retention after 2–4 years
Stay ahead of compliance: min wage, pay transparency laws, etc.

Founder Fails

Promised “1% equity” without cap table modeling > turned out to be 0.3%
Didn’t update offer after 409A change > strike price too high
Gave same comp to everyone > overpaid junior team, lost senior hires
Didn’t budget for payroll taxes or state employer costs

When to ask for Help

When designing your first comp packages
Before negotiating with senior or technical hires
To benchmark salaries and equity across roles
If experiencing high turnover or hiring roadblocks
Before fundraising rounds that include new hires

Frequently Asked Questions

Q: What’s “market rate” for early-stage startup salaries?
A: Varies by role and geography, but early-stage startups often pay:

50–80% of corporate rates in exchange for equity
Founders may defer salary or pay themselves modestly ($50K–$100K)

Q: Should I share equity value in offer letters?
A: Yes — include number of shares, % ownership (fully diluted), and strike price (if available). Avoid over-promising on “future value.”

Q: How often should I give raises or refresh grants?
A: Annually is common for raises. Equity refreshes typically happen after 2–4 years, or during a promotion.