Tech startup salaries: how low are they really?

The recent buzz around startup salaries being too low has put the issue back in the spotlight. A lot of people who moonlight as writers have spoken up and said these salaries aren't near enough to live off. Plenty have jumped on board and added their opinions on whether tech startup salaries are low or not, but what do the facts tell us?

In fact, there are a number of reasons why they may be overpaid compared to other industries.

In the popular imagination, startup employees are paid less than they are worth. The idea that you would work for a startup for less money than you could make elsewhere is counterintuitive to most people: why would you work for less money? The reality is that there are a number of reasons why they may be overpaid compared to other industries.

In fact, there are a number of reasons why they may be overpaid compared to other industries. First, startups need talent and they need it at all levels: from interns to CEOs. Second, many startups are founded by young people who want to change the world and want to do so by making an impact on the world through their work.

Third, startups often offer better benefits than large companies (e.g., flexible work hours) which can help attract talent and keep employees happy. It's not just about salaries though — there's also equity. Equity is what makes the difference between an employee at a startup and an employee at any other company in the world: only when your company goes public or gets acquired can you cash out on your shares of equity (or "stock" as it's known in Wall Street parlance).

The tech startup pay gap

A new study has found that female founders of tech startups make an average of $116,000 less than their male counterparts. The study, conducted by Comparably, a compensation and career review platform, examined data from more than 1,000 companies in the U.S. It found that the gender pay gap was most pronounced at early stage startups (less than 100 employees), although it still exists at later stage companies (more than 100 employees).

Comparably analyzed salaries across all positions and found that men earn 39% more than women on average — with a 9% difference at early stage companies and 38% at later stage companies. The study also revealed that female founders are paid less than male ones at every level of seniority within the organization: from entry-level jobs all the way up to CEO.

The gap was largest among vice presidents and directors, where men earn about $50,000 more than women on average.

Tech startup salaries are lower than you think… but that’s not a bad thing

In an industry that’s growing fast and attracting more talent, it might be surprising to hear that tech startup salaries are lower than you think. According to Paysa, the average salary for a software engineer at a startup is $116,000 — which is actually lower than the national average of $130,000 per year.

The question is, why? Why are there such wide discrepancies between the pay of employees at startups and other companies?The answer lies in what they’re willing to give up in exchange for those higher salaries (or higher stock options). When you work at a large company, your compensation package will include benefits like health insurance and 401(k) matching.

You also have more job security and likely won’t be laid off as easily as someone at a startup might be. At a tech startup, there are no benefits, no paid vacation time or sick days — all of which can add up to thousands of dollars each year for larger companies.

There’s also no guarantee that you’ll stay employed for long enough to see any kind of return on your investment in these things.

What to do with your compensations package

A startup is a company that's in the process of developing a scalable business model. The most common type of startup is a technology company, but there are other kinds of startups, such as fashion or food businesses. Startups tend to have lower salaries and less perks than established companies because they're still trying to grow their business.

But that doesn't mean you should expect an entry-level salary with no benefits or equity. In fact, many tech startups offer more competitive compensation packages than older companies because they have fewer employees and more money to spend on each one. The trouble with startup salaries When you're interviewing at a startup, it's important to understand what kind of salary range you can expect in addition to any perks or equity options that come with the job offer.

The biggest issue with startup salaries is that it's difficult for employers to predict how much they'll be able to pay employees in the future. Startups typically operate on tight budgets and don't always have enough capital available for large increases in compensation packages if things go well later on down the line.

In Brief...

So, are tech startup salaries really lower? To answer that question, we need to clarify what we mean by "tech startup." The data suggests that in this case, it is more likely to be a software company with a few unrelated employees. For example, as Table 9 shows, the typical software company in the CCC group had a total of 1,592 full-time-equivalent employees and paid $93,597 on average to each employee.

By comparison, companies with fewer than 50 employees paid an average of $105,533 each. As the firm has more employees and the skill sets required of the position increase, salaries tend to rise. In addition, these smaller firms tend to be located in regions such as Silicon Valley or Massachusetts where salaries generally are higher than average.