State of Startup Compensation, H1 2024

Authors: Peter Walker, Hamza Shad, Kevin Dowd
Read time: 13 minutes
Published date: 25 July 2024

Carta data shows that companies have become leaner and salary benchmarks have remained flat across much of the ecosystem.

Companies on Carta made more than 60,000 new hires during the first four months of 2024. Over that same span, more than 60,000 employees on Carta left their positions.

That’s a lot of activity: A lot of dream jobs earned, a lot of new opportunities begun—and, unfortunately, a lot of opportunities ended.

As these tens of thousands of individual lives have changed, the broader landscape of startup compensation has changed, too. Layoffs have become less common. The average salary has increased for some job functions, such as design, and declined for others, such as customer support. And the geography of startup compensation is shifting: The average size of pay packages is on the rise for employees in metro areas like Atlanta, Cincinnati, Pittsburgh, and Sacramento.

The startup ecosystem looks a little different today than it did two or three years ago. It only makes sense that the way startups compensate their employees has shifted, too.

At Carta, we believe it’s our responsibility to share the insights that come from an unmatched amount of data about the private market. The data below comes from thousands of CTC customers with over 500,000 data points used by Carta Total Compensation. Other metrics in the report, such as those that describe employee movement, derive from the aggregate pool of more than 1 million employees currently working for the 45,000 startups that use Carta to manage their cap tables.

H1 2024 key takeaways

• Salary and equity held steady: The average amounts of both salary and fully diluted equity issued to new employees have been largely unchanged since last September. The market seems to have landed on a new normal for equity packages, which had previously declined sharply in late 2022 and 2023.
• Hiring hasn’t picked back up: There were fewer new hires this January than in any of the previous four Januaries. The same was true for this February, this March, and this April. In part due to lower hiring, total net headcount on Carta has remained flat.
• Companies raising cash are leaner: Startups that closed seed funding in H1 had an average of 5.3 employees, down from 6.9 in H1 2021. Series A startups have averaged 15.6 employees so far this year, compared to 17.6 in H1 2021. At most stages, successful fundraising teams have been smaller.

Hiring & headcount

The number of monthly job departures from companies on Carta has been declining steadily so far in 2024, with most of that reduction coming from a dip in layoffs and firings. There were 7,305 of these involuntary departures in May, down 38% since January 2024 and 62% from the recent peak of layoffs and firings, which occurred in January 2023.

Voluntary job departures have also been on the wane over the past two years, if to a less dramatic degree than involuntary moves. There were 11,683 voluntary job departures on Carta in May, 4% lower from this January’s total and down 51% from May 2022, the recent high point.

As this year has progressed, layoffs and firings have begun to make up a smaller portion of all job departures. Overall, there were 18,988 departures tracked on Carta in May. Less than 40% of those departures were involuntary, the smallest proportion since September 2022.

Ever since late 2022, the total number of employees on Carta has essentially been in a state of stasis. Headcount would grow by a few thousand one month, then decline by a few thousand the next. This stands in sharp contrast to the preceding four years, when net headcount on Carta typically grew by at least 10,000 people per month.

This new emphasis on financial austerity means that, in terms of employees, the startup industry is no longer growing like it used to.

Hiring data bears out the low-growth hypothesis. January is typically an active time for adding talent. In three of the past four full years, it’s been the busiest hiring month of the year. Once again, January 2024 saw a spike in new hires relative to other recent months.

Relative to past Januaries, however, it was a slow start to the year. The 27,677 new hires that occurred on Carta in January 2024 is down 29% from the previous January. It’s also the fewest new hires that have taken place in any January so far this decade.

In the first four months of the year, total net headcount on Carta declined for six of the 11 primary industries we track. It stayed flat for two more. That leaves just three industries where total headcount has grown: medical devices, hardware, and energy. The most growth took place in energy, where hires outpaced departures by 1.8x during the first four months of the year.

Company composition

Less than 3% of all venture-backed companies on Carta are currently at Series D or later. But these late-stage companies account for about 25% of all headcount on Carta, a testament to just how much larger these advanced startups are than their early-stage peers. The average company at Series E+ has nearly 285 employees on its payroll, while the average pre-seed company has just six or seven employees.

Despite this huge disparity in average company size, total headcount across all employees on Carta is dispersed relatively evenly across the venture lifecycle. No stage comprises more than 20% of all employees on Carta (Series A), and no stage comprises less than 8% (seed).

In recent years, the time between when an employee is hired and when they leave their job keeps getting shorter. Since the pandemic in particular, it appears that workers as a whole are less inclined to stick with jobs for longer periods of time.

One example: 43.4% of all employees on Carta who were hired in 2021 had left within two years. That proportion never reached 40% among workers hired in any year from 2016 to 2020. Another example: 23.3% of all employees hired in 2022 had left within one year. Again, that’s significantly higher than any of the previous six annual cohorts.

However, this trend may already be coming to an end. The cohort hired in 2023 saw 8.2% of employees leave within six months; while that’s higher than most recent years, it’s lower than the 9.0% rate for employees hired in 2022.

Companies that closed Series A rounds in the first half of 2024 had an average of 15.6 employees. That’s 16.3% lower than the average headcount for Series A companies five years ago, in 2019. The average employee count has also declined over that span at Series B and Series C.

In some sectors, the typical size of companies that have raised seed funding has changed significantly in recent years. Average headcount at seed-stage healthtech startups rose by 76% from H1 2020 to H1 2024. On the other end of the spectrum, average headcount for seed-stage consumer startups declined by 41% over that same span.

Salary trends

The average salary benchmark across a wide range of job functions increased by 0.5% between January and April, continuing a stretch of modest salary gains in recent months. The average salary benchmark previously rose by 0.6% between September 2023 and January 2024.

Employee paychecks got bigger in the past year. The average salary on Carta increased from May 2023 and April 2024 for nearly every job level, with senior individual contributors the lone exception. In terms of percentage gains, the largest increases occurred for entry-level employees, who saw their average salary rise by 2.3%.

Average salaries stayed mostly steady from May 2023 to April 2024 across different job functions. The average salary for customer success employees increased by 3.7% during this span—outpacing inflation—while the average salary for support employees declined by 1.8%.

Equity trends

The average size of equity packages issued to new hires (measured on a fully diluted basis) has declined substantially since November 2022. Since September 2023, however, it has barely budged. The startup world as a whole seems to have settled on a new normal for the amount of equity compensation that new hires can expect—at least for now.

The percentage of vested, in-the-money stock options that employees choose to exercise before they expire has been in a state of steady decline over the past few years. In general, option exercise rates tend to correlate with venture-backed valuations and with employee confidence: Employees are more likely to exercise options when valuations are high, because they believe doing so will be financially worthwhile.

Most of the time, when a company parts ways with an employee, the former employee has 90 days to decide whether to exercise any vested stock options. Over the past several quarters, however, the frequency with which companies offer an extended post-termination exercise period (PTEP) longer than 90 days has gone up—and now seems to have settled on a new normal. In each of the past six quarters, the rate of extended PTEP for terminated options has landed somewhere between 19% and 21%.

Compensation geography

No matter their size, the majority of venture-backed startups adjust their compensation based on an employee’s location. But smaller companies are a bit more likely to offer geographic adjustments than larger companies. Nearly 90% of all startups valued at less than $25 million factor in an employee’s location when determining compensation, compared to just 71% of all companies valued at $1 billion or more.

Over the past few years, startups have grown less likely to make hires in their home state and more likely to add talent in other markets. In some cases, there’s been a significant shift. For instance, back in 2019, startups valued between $1 million and $10 million made 67% of their hires in their home state. By 2023, that rate had fallen to 45%.

But that trend has not necessarily continued into 2024. The frequency of home-state hires has ticked up so far this year for companies valued between $1 million and $10 million. It’s also increased for startups valued between $10 million and $50 million, and for much larger companies valued at $500 million or more. For startups in that middle ground—valued between $50 million and $500 million—in-state hires continued to decline in frequency in 2024.