⇐ Back to blogs

How Do Startups Pay Their Employees

blog-img

Startups are a great place for individuals who are passionate about their work and want to make a real impact in their industry.

In the early days of a startup, there is often little to no money coming in. This can make it difficult to pay employees, especially when those employees are critical to the company's success. So, how do startups pay their employees?

There are a few different options available to startups regarding employee compensation. We will discuss some of the most common methods. So without wasting any time, let's dive in!

How Do Startups Pay Their Employees

In the early stages, startups usually receive funds from venture capital firms or angel investors. This funding allows the company to cover its operational costs, such as employee salaries and benefits.

This is the most basic way startups pay their employees and will continue to do so until they generate revenue.

Another standard method is to offer employees equity in the company. This gives them a financial stake in the company and helps to build a sense of community among staff.

The employees can profit by selling their equity at a later date, or they may keep their shares and benefit from any future growth of the company.

Many startups offer their employees a mix of salary and equity to compensate for lower base salaries.

As long as the employees are motivated by their work and the company's mission, they will likely be willing to take a lower salary in exchange for equity or other perks.

How Do Startups Get Funding To Pay Their Employees?

One of the main challenges that startup companies face is obtaining funding to run their company. This is especially true in the early stages of a company when there are typically very few sources of revenue and many expenses.

One common way startups get funding is through angel investors or venture capitalists. These investors provide the startup with capital in exchange for equity or ownership in the company.

However, there are other ways startups can get funding, such as through loans, crowdfunding, or other sources.

Ultimately, the key to obtaining funding for a startup is demonstrating that you have a strong business plan and a team of talented individuals who are passionate about your company's mission.

By showing that you have the potential for success, you can attract the investors and funding you need to make your startup a reality.​

How Much Do Startups Pay Their Employees?

We all know startups initially pay employees a bit low because they cannot offer competitive salaries due to low funds. However, some startups do manage to pay their employees a reasonable salary once they start generating revenue.

However, on average, startup employees are paid between $50,000 - $100,000 per year, depending on their role and experience level.

Of course, this can vary greatly depending on the individual company and its industry. For example, employees working in the tech industry are typically paid significantly more than those in other industries.

How Much Do Startups Pay Interns?

Interns are essential to any startup; many offer competitive compensation packages to attract the best talent.

Generally, interns are paid anywhere from $15 to $45 per hour, depending on their experience level and role.

This is still lower than the average salary for a professional, but it allows startups to give their interns actual work experience and get value in return.

Overall, startup employees are typically willing to take lower salaries and fewer benefits if it means gaining valuable experience and contributing to the success of a fast-growing company.

Do Startup Founders Get A Salary?

In most cases, startup founders will choose to take a salary once the company starts generating revenue. However, most startup founders rely on equity instead of a salary to compensate them for their work.

Equity can be a great way for founders to earn a significant return on their investment if the company is successful.

This is especially true in the early stages of a startup when founders are often wearing many different hats and pulling long hours to get their company off the ground.

However, if the company has a good amount of available funds or is generating significant revenue, it is normal for startup founders to be paid a salary.

On average, this salary ranges anywhere from $100,000 to $200,000 per year. Of course, many factors influence this salary range, such as the founder's specific company, industry, and experience level.

At the end of the day, many people view startup founders as incredibly driven and passionate about their work, so they are willing to make a few sacrifices to achieve their goals.

How Do You Negotiate Salary With A Startup?

Many people think that they cannot negotiate a salary for a startup. Well, this is not really true.

Indeed, startups do not have the same resources as larger companies when offering competitive salaries.

But there is always room for negotiation, especially if you are an experienced professional with valuable skills that can contribute to the company's success.

When negotiating salary, it is vital to highlight the benefits that you can bring to the company and demonstrate your willingness to make sacrifices in other areas.

There are a few more things that you can do to increase your chances of getting the salary that you want, such as :

Living Cost: If you live in an area where the cost of living is high, you could ask for more salary. This is because you will need to pay more for rent, transportation, food, and other expenses in a high-cost city.

Industry Rates: You can also research the industry rates for similar roles in your area and negotiate based on this data.

Previous Experience: If you have a lot of experience in your field and can demonstrate how this will benefit the company, you may have more leverage when negotiating salary.

Undoubtedly, negotiating salary at a startup takes time and effort. If you are willing to put in the work and make yourself an indispensable team member, there is a good chance that you will be rewarded with the salary you want.

Paying Employees In A Nutshell

Everyone knows that startups have little to no funds to pay their employees. Angel Investors or Venture Capitalists are often the ones who provide funding for the salaries of the employees.

However, other than that, there are many ways that startups can compensate their employees for their work and contributions to the company, as explained above.

Ultimately, it all comes down to finding the right employees who are passionate about the company's mission and willing to work hard for its success. By offering competitive salaries and benefits, startups can attract top talent and help their businesses succeed.​

Finally raise your round with Investor Hunt


Investor Hunt is the easiest way to research investors for your startup so you can spend less time Googling and more time raising.

FIND THE PERFECT INVESTOR TODAY