How AI is changing the compensation game for VC-backed startups

Authors:
Kevin Dowd, Ashley Neville
Read time: 7 minutes
Published date: 8 April 2026

The startup compensation market is bifurcating between companies that are AI-native and those that aren’t. For both groups, however, AI is changing the way executives think about how many people they need to hire, who they need to hire, and how those hires should be compensated.

Headcount growth has slowed

In December 2025, there were more job departures than new hires at venture-backed companies on Carta, the first time monthly headcount growth has gone negative since March 2024. Up until mid-2022, it was common for net headcount to increase by more than 10,000 people per month, peaking at monthly headcount growth of more than 50,000 in January 2022.
This December data is the latest example of a broader trend that was already underway before the launch of ChatGPT, but which in the past three years has become the new industry norm: Net headcount across the startup universe is growing much more slowly than it used to. And in some cases, it’s shrinking.

This trend applies across every major startup industry. But it’s less pronounced in some, such as hardware, than in others, such as gaming. In general, headcount growth remains a little stronger in industries that create and produce physical products, where human labor may be more difficult to replicate with AI, than in industries centered around software.

Not all of the recent downturn in headcount growth can be attributed to AI—hiring numbers were likely going to decline after the 2021 venture bull market regardless of what new technologies emerged. But AI has clearly accelerated the process.

For hiring managers and executives, this shift may change talent acquisition timelines. It can also increase the importance of each new hire. When companies operate with smaller teams, they’re more likely to prioritize certain roles that are primed to directly impact the business, such as engineering, and to wait on other roles, like HR.

Startups are prioritizing different positions

Over the past few years, finding top talent in roles related to AI, machine learning (ML), and data science has become more important than ever. At the same time, the exact nature of the roles in those areas for which startups are hiring has undergone a shift.

Back in 2020, more than 75% of all AI/ML/data hires were for data scientist and data engineering roles. Today, that figure has dropped below 50%, and continues to fall. Now, the majority of new hires in these areas come in with titles related to AI engineering, ML, and other AI-specific responsibilities.

This raises an important question: Are actual job functions changing, or just the semantics of job titles? The answer might vary depending on the company. With that in mind, hiring managers should clearly define what skills they’re looking for in these roles—and closely vet applicants to make sure they meet the qualifications.

Today, nearly every software engineer uses AI in their work. But that doesn’t necessarily make them true AI engineers, a title that typically refers to those who are involved in building AI models or otherwise crafting the infrastructure of AI platforms and tools.

Early-stage equity packages are ballooning

For smaller startups, the biggest adjustment so far has been a major increase in the size of equity packages granted to new hires. For startups valued between $1 million and $10 million, the median equity grant for AI/ML engineers increased by 59% from January 2024 to February 2026. For startups valued between $25 million and $50 million, median grant size increased by 30% over that same span.

Median salaries for AI/ML engineers have also increased among smaller startups, but not to the same degree. Why has equity been more flexible? One reason is that, from late 2022 to late 2023, the average new equity grant issued to employees across the broader startup ecosystem shrunk by nearly half, while average salaries stayed roughly the same.

Another reason why equity packages are growing is related to the aforementioned reductions in headcount growth. Data shows that, as typical early-stage headcounts have declined, the typical size of employee equity pools has mostly held steady. If you split the same pool of equity among fewer people, each new hire can receive more.

Thirdly, for smaller companies, increasing equity is often the best card to play when competing for top talent.

For hiring managers seeking talent in these roles, the recent data can impart multiple lessons. One is to play to your strengths as a company. Another is to remember that the compensation landscape changes quickly.

AI natives pay top dollar for top engineers

At an AI-native startup valued at more than $500 million, an AI/ML engineer compensated at the 80th to 95th percentile would earn $320,000 in annual salary and be granted 0.146% of the company’s total equity. At a startup with the same valuation that is not AI-native, those same benchmarks drop to $285,000 in salary and 0.1% of total equity.

That’s the high end of the compensation range. At the median, however, non-native-AI companies pay slightly higher salaries for AI/ML engineers than their AI-native counterparts. This indicates AI-native companies are willing to pay more for top engineering talent, but also that they have a high bar, often seeking true specialists with highly technical skills.

When hiring for AI/ML engineers, hiring managers should know the quality of the talent they’re pursuing, as well as what sorts of companies they’re competing against. If candidates are among the best of the best and also looking at AI-native competitors, then compensation packages may need to be commensurately more lucrative to attract their attention.

AI natives pay more for GTM roles, too

Once all those new AI/ML engineers build their cutting-edge products, someone has to take them to market. At the top end of the market, those sales and marketing professionals are receiving better compensation at AI-native companies, too.

These higher wages and additional equity reflect the fact that GTM hires at AI-native companies are often asked to pitch novel, highly technical products within a nascent and rapidly changing market.

The difference in compensation between AI-native and non-AI-native companies is wider for GTM roles than for AI/ML engineering roles. However, total compensation tends to be lower in GTM, particularly in terms of equity.

How AI informs the data

All the compensation data included in this article is culled directly from companies. Even when it comes straight from the source, however, compensation data for private companies—particularly data on equity grants—is notoriously complex and opaque. For the past five years, Carta has been applying AI models to gather, clean, and analyze this data, making sure our clients have the best, most relevant information at their fingertips to inform their hiring decisions.

Given how quickly the compensation market is evolving for VC-backed companies, that quarterly cadence is critical. Just as AI is transforming the job market, it also enables Carta to accurately track that transformation in a timely manner, creating compensation benchmarks and toolkits ready to be used out of the box by any startup executives making key hiring and compensation decisions.