# The state of startup compensation, H1 2022

Author: Peter Walker  
Read time: 9 minutes  
Published date: June 27, 2022

Carta’s first startup compensation report looks at headcount, payroll, and equity benchmarks—plus trends in remote hiring, and salary across the U.S.

## Contents
- [The state of startup compensation, H1 2022](/content/data/compensation-report-h1-2022/#the-state-of-startup-compensation-h1-2022/index.html)
- [Startup headcount](/content/data/compensation-report-h1-2022/#startup-headcount/index.html)
- [Payroll and employee stock option pools](/content/data/compensation-report-h1-2022/#payroll-and-employee-stock-option-pools/index.html)
- [Equity ownership](/content/data/compensation-report-h1-2022/#equity-ownership/index.html)
- [Salary trends](/content/data/compensation-report-h1-2022/#salary-trends/index.html)
- [Remote work and compensation by geography](/content/data/compensation-report-h1-2022/#remote-work-and-compensation-by-geography/index.html)
- [Methodology](/content/data/compensation-report-h1-2022/#methodology/index.html)

For most [startups](/content/learn/startups/index.html), payroll is the primary driver of [cash burn](/content/learn/startups/metrics/burn-rate/index.html). As inflation and economic unease rise, knowing trends in compensation becomes critical. This report is based on data from over 127,000 employee records across startups that use [Carta Total Comp](/content/equity-management/compensation/index.html).

### Key trends:
- **Remote hiring soars:** In 2019, about 35% of new hires were based in a different state than the primary headquarters. That number has jumped to 62% this year.
- **Geo-adjusting is the norm:** The majority of companies (84%) take employee location into account for [compensation packages](/content/learn/startups/compensation/index.html).
- **Engineering is a key hire:** Engineering accounts for nearly half of payroll spend in companies valued between $1 and 10 million.
- **Terminations rise:** Involuntary terminations made up 29% of departures in May 2022, nearly double the 15% recorded in August 2021.

## Startup headcount

### Headcount growth by valuation
Headcount expands as a company’s valuation increases. The median company valued at $50 to 100 million employs 52 people beyond the founders. Startups hitting the $1 billion mark typically have over 700 employees.

### Headcount by job function
The largest job function at most tech startups is engineering, comprising over a quarter of the workforce. Sales, operations, and customer success also contribute significantly.

### Workforce by level
Junior employees make up the majority of the startup workforce. As companies grow, the structure becomes more complex, with senior roles becoming a smaller percentage of the total workforce.

### Headcount adjustments in 2022
Involuntary terminations accounted for 29% of departures in May 2022, showing a significant increase in layoffs.

## Payroll and employee stock option pools

### Payroll by valuation
Startups spend heavily on payroll early on, with a $10 million median payroll for companies valued at $50–100 million.

### Payroll by job function
Engineering consistently accounts for at least 30% of payroll spend, regardless of company size.

## Equity ownership
Employees receive a larger percentage of equity as their company grows. Median shares for employees in a company worth $25 million is around 14%, while unicorns offer around 20%.

## Salary trends

### Median individual salaries
Legal roles top the charts with the highest median salaries, followed by strategy, product, and engineering roles.

### Growth trends
Between late 2021 and Q2 2022, five job functions saw more than 4.5% growth in average salaries.

### Employee salary growth
Salaries typically jump by about 15% per level as employees advance.

### Median salary by valuation
Smaller companies tend to have lower median salaries, but this gap narrows significantly as companies grow.

## Remote work and compensation by geography
In 2019, about 35% of new hires were remote. That number rose to 62% in 2022.

### Hiring by company valuation
Remote work trends extend across company valuations, but early-stage startups may still prioritize co-location for culture-building.

### Geo-adjustment by valuation
Most companies (84%) do consider location for compensation, particularly at lower valuations.

### Compensation by metro area
Top metro areas like San Francisco and New York offer the highest pay packages, while others are tiered based on compensation scores.

### Regional trends
The West is still the favorite region for tech talent, while compensation growth lags in the Midwest.

### Differences in regional compensation for tech workers
Regional pay can differ significantly for tech workers compared to other industries.

### Year-over-year changes in regional comp
Salaries are adjusting towards those in higher-tier metros due to increased remote work.

This trend could have significant impacts for tech workers and companies recruiting talent in diverse locations.

## Methodology
This report examines compensation trends across venture-backed companies to provide useful benchmarks to company leaders. Carta helps over 2,000 venture-backed companies compensate their employees through Carta Total Comp. The data presented above is an aggregated, anonymized view into the pay strategies of these startups.