Force of Good

Seed Stage Compensation

May 02, 2011

So we have been talking a little bit about startup compensation across the nation and in Atlanta. Today the subject is seed stage compensation. In particular for those companies that have raised a typical angel round, say $500k.

Before going there it is helpful to summarize later stage startup compensation. Abby and I had a brief text exchange this week to help her with some work at one of her startups. This is what I wrote:

Here is a general way to think about it.
$200 ceo
$150 vp
$100 director
$66 manager
$44 coordinator
Plus or minus 10%
Individual contributors with specialized skill set $50 - $120 depending on skill and experience.

These numbers are based on my experience at venture backed startups as well as discussions with venture backed CEOs. So what about the earlier companies? Those that are angel funded. 

There are no studies that I am aware of specifically on angel funded companies. But I know one thing, the numbers are lower than those above. A lot lower. That angel investment has to last a year or two. The spread between the CEO and the other people working at the startup is also a lot less.

While the standard deviation is huge, some founders take no money at all until their business can pay them or they raise a larger round, I venture to say that your average founder with significant domain knowledge and/or startup experience (its easier to just throw the titles away for this discussion) makes between $75,000 and $100,000. There is no bonus program. The employees, those with specialized skills, earn about 75% of what they might make at a venture backed firm. Sales people can earn full salary if they hit their numbers but the comp plan is highly leveraged. On a equity front the founders have whatever they agreed to and the employees have access to a 5% to 10% option pool.

These are my thoughts. I would love to hear yours.

Posted in Management, Startups
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