State of Startup Compensation, H1 2024

Authors: Peter Walker, Hamza Shad, Kevin Dowd

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.

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.

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.

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.

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. 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.

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.

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.

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.

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 size of seed-stage companies ticked up slightly between H1 2019 and H1 2024. On a shorter timeline, however, seed-stage companies are shrinking too.

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 to 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%.

Equity trends

The average size of equity packages issued to new hires 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. There was a brief pause to this trend in Q1 2024, but it resumed again in Q2.

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. Exceptions abound, but in general, startups on the lower end of the valuation spectrum tend to be younger, while more valuable startups tend to be more mature.

Companies in research-intensive industries such as biotech and hardware still make a majority of their hires in the same state where they’re based. Companies that are more reliant on software—such as those in fintech and consumer—are much more likely to make out-of-state hires.