Compensation Decoded: Tech leader salaries at early-stage startups
Whether you’re a tech leader looking for your next role or a founder keen to add an experienced manager to your ranks of engineers, gauging compensation takes work. Tech leaders want a remuneration package that not only reflects their talents and efforts but matches what others in the industry are taking home. Founders, meanwhile, need to know what’s available within their budget and what they must offer to attract the best and brightest.
However, the current methods of finding this information require understanding certain nuances, and the volume of data available can continually be improved. Information on general salary bands or ‘take-homes’ for a specific role is scattered across the internet, while more comprehensive datasets often sit behind a costly paywall, and even then, it needs more breadth and analysis to allow readers to make any accurate comparisons.
As with our ‘A Founder’s Worth’ report, we wanted to close the information asymmetry and provide current and future tech leads, along with the founders hiring them, a thorough breakdown of compensation by gender, sector, stage and more. And just as with this survey’s founder-focused counterpart, we hope this open survey to be the trusted go-to source, not just for 2023 but for years to come for the ecosystem.
What do we mean by Tech Leaders?
For this survey, we focused on the following levels:
Executive (C and VP level), Senior (often 5–10 years of commercial experience), and Senior+ (often 10 years plus of commercial experience) for Product and Software Engineering.
The participants’ levels and titles include:
Levels: Staff, Senior, Lead, Manager, Architect, Head of, VP and C-level.
Titles: Data Engineering, ML, Cloud, Frontend, Backend/Platform, DevOps/Infrastructure, Technical Product Management and Software Engineering/ Development.
A note about equity…
It’s the most challenging element of Total Compensation to benchmark since there are many unique elements and considerations to take into account. It’s awkward to compare different equity schemes, company valuations dynamically change, and your location matters in how they are treated from a tax perspective to make the numbers tangible.
Yet, it is a unique and vital part of the total compensation story, so this is tricky to compare and contrast at scale. If you’re working at a fast-growing startup, with luck and the correct planning, you can walk away from a liquidity event with a significant, life-changing amount. Similarly, if you’re inside a public tech titan, stock prices can fluctuate radically. It all sounds very opaque, yet one thing is clear: the accelerated learnings, visibility, experience and progression you gain at a startup with less day-to-day bureaucracy increases the possibility of winning big as a foundational employee.
Please note — arm yourself with the knowledge of how share options work and how yours will be treated compared to other opportunities. Frequently, the creators and maintainers of valuable products are the unsung heroes in any startup story — you/they deserve to be recognised for the impact and contribution from any upside.
Key takeaways
- Female tech leads are an exception within the sector and earn more than their male counterparts.
- Ahead of widespread US and EU pay transparency laws, European-based Tech Leads can clearly understand how much is on offer stateside.
- Bootstrapped companies are showing there’s more to high salaries than substantial funding rounds.
- Work setup correlates surprisingly strongly with higher compensation.
- As Fintech’s power wanes, the industry sector becomes less and less of a factor.
Meet the authors
Methodology
We launched the survey on April 11, 2023 and closed on May 09, 2023. In partnership with Gergely Orosz, The Pragmatic Engineer, we circulated the survey to over 1,000 respondents worldwide. We asked them about their basic salaries, bonuses and equity, where they’re based, workplace approach (remote/hybrid), role in the company, level of seniority, job family, gender, sector and stage of business.
Then our superstar analytical powerhouse, Richard (we’re so grateful 🙏), dived in. We ensured all currencies were correct and standardised to Euros and USD, combined 47 cities and 24 countries into 11 regions: Africa, APAC, Baltics, Benelux, CEE, DACH, France, Middle East, Southern EU, North America, South America, and the UK, and removed any incomplete or unclear responses.
We determined the median basic salary and total compensation ranges by level, funding stage, region, gender, engineering team size, and industry. We even explored whether they worked from home or the office.
Then we dug a little deeper. All of that is in this report.
1. Compensation by gender: Female tech leads bridging the industry’s pay gaps
To say tech has a gender issue would be underselling it somewhat. Across the sector, 52 women are promoted to manager for every 100 men, while a recent report from Sifted found that among UK startups, 19 of the 20 best-funded tech companies pay men better than women. No stat evidences this more starkly that of the 1,000+ Tech Leads that responded to our survey, 8.5% identified as female.
But while women remain vastly underrepresented and, for the most part, underpaid in tech, our survey found that female tech leads are taking home more money than their male counterparts — at least on average. The median total compensation for early-stage female tech leads is €151,000 compared to a median of €142,000 for men. This is the case across all three seniority levels, with the median total compensation of women in executive roles €61,000 higher than male executives.
It’s impossible to say definitively what’s behind the shift, but we feel several macro factors have likely had an impact. Across the sector, companies have been proactively hiring female candidates, and there was an estimated 7% increase in the number of women in tech between 2021 and 2022. As we’ve seen, underrepresentation and retention remain a huge issue — over half of the women in tech drop out by age 35. But as fewer female candidates are in the market, the best and brightest can demand higher salaries.
Following the pandemic, the increase in remote and hybrid work, too, will have offered a new degree of flexibility to employees who are still often forced to choose between motherhood and their careers.
Moreover, the introduction of pay transparency laws across the US and incoming EU legislation will have forced many companies to frantically try and narrow any gender pay gaps on their books.
While this is all welcome news, maximum base salaries remain considerably higher for male tech leads in every job family and seniority level. The maximum base salary for a female executive is just over €300,000, while the maximum base among the male executives we surveyed was over €700,000.
2. Compensation by location: US/EU pay gap laid bare ahead of new transparency laws
When the salaries and total compensation are analysed by location, there was only ever going to be one winner. The US market’s maturity, the companies’ size, and the funding rounds involved mean stateside firms can offer their tech leads considerably more than those based anywhere else. The median base salary is €188,000, with the median total compensation of €210,000. In comparison, UK tech leads — second in the table for total compensation — can earn just 69% of that. The gap to continental Europe is even more prevalent, with tech leaders often making around half of what they might get in the US.
While this is no surprise, the context in which it sits does pose interesting questions — especially for US firms with European-located employees. New transparency laws in states such as California and New York require firms to lay bare the salaries of all of their employees, including those living overseas, which could result in difficult conversations. How would a Paris-based engineer working for a Silicon Valley startup feel when they find out their West-Coast counterpart is taking home twice their salary?
The UK is the frontrunner overall in Europe, but on the continent, tech leads in Benelux earn the most, with DACH leads making only slightly less.
One notable finding is the relative equality of compensation across the rest of Europe. For many years, Spain and CEE countries were famous for the widespread availability of low-cost software engineers, thanks to the relatively low cost of living afforded to them. But that no longer seems to be the case. While a global rise in living costs has undoubtedly had some effect, it’s also likely that those markets are now home to second-generation tech talent. That is, the markets have matured, the earliest startups have exited, and those previously low-cost engineers can now demand salaries in line with the continent’s more mature markets. In 2022, for example, despite the wider depressed investment environment, Spanish startups raised €4bn of venture capital, the nation’s second-highest annual total.
3. Compensation by stage: Bootstrapped firms show tech salaries aren’t all about funding
As logic would dictate, the more mature the company, the higher the salary and bonus. However, the growth in compensation between stages also narrows as companies mature. For example, pre-seed median total compensation is €85,250, jumping to €130,00 at series A, whereas the jump from series B to D+ goes from €142,215 to just €150,000. This, too, makes sense, with companies growing fastest between seed and series A and tending to grow more incrementally from that point.
The outlier in all this is bootstrapped — i.e. non-VC backed — companies, where total compensation ranges from just over €30,000 to almost €1m. The vastness of that gap is a bit of a red herring, with bootstrapped companies encompassing very, very early-stage startups and fully functioning profitable enterprises.
However, this still shows that early-stage tech salaries are not intrinsically linked to funding. Yes, among venture-backed companies, on average, higher levels of funding result in higher compensation, but the salaries on offer at mature bootstrapped companies can be just as inviting. In fact, the highest total package our survey unearthed was at a bootstrapped firm, over €100,000 more than its nearest VC-backed counterpart.
4. Compensation by seniority: Setup is a factor
When looking at compensation by seniority, the more senior staff are paid more and receive a higher percentage of their total compensation as a bonus. So far, so straightforward.
The most notable finding is that there’s a surprisingly big correlation between working setup and salaries with those working in-office five days a week or in a hybrid role earning notably less than those able to work remotely. Median total compensation among those spending all week in the office was €130,076, whereas those able to work from anywhere receive €156,000 (median). Again, while it’s impossible to know the exact reasons behind this, this is likely down to companies that offer remote working tending to pay their staff more rather than senior tech leads demanding a change in setup.
When the findings are broken down by job family, the highest maximum base salary and total compensation are earned by Engineering Management. However, VPs and C-suite in Software Engineering earn the highest median wages by a long way, taking home over €200,000 before their bonus. The message here? It pays to be a specialist.
5. Compensation by sector: No more Fintech factor
Breaking down the numbers by sector reveals very little except that the industry a tech lead works in has little impact on their compensation. Overall, Fintech and consumer focussed startups offer a slightly higher median total compensation of around €150,000 compared to B2B SaaS and other sectors offering around €139,000. However, it’s negligible compared to other variables such as gender, seniority and location. This will be particularly worrying for tech leads in Fintech, where previous levels of investment were reflected in sky-high salaries. In Q1 2022, Fintech in Europe alone raised $9.7bn, making it the continent’s most successful fundraising sector for the fourth year in a row. By Q1 2023, that figure had dropped by 83% to €2bn. The equality in the industry seems to reflect this decline.
Similarly, the size of a company’s tech department has a surprisingly limited impact. As the graph shows, compensation grows steadily but peaks at €150,000 for 50 to 250 employees, even dropping off after that.
Joining up the pay transparency conversation
In general, the findings of this survey are as expected. Larger, mature companies offer higher salaries, while more experienced tech leads can demand better pay packets. But there are small surprises and, more importantly, signs of progress within the data — no more so than our findings around female tech salaries.
Furthermore, the results reflect the new environment many in tech find themselves in. Remote work has long been a part of the startup ecosystem, but as the broader world of work debates its merit post-pandemic, it now has a bearing on salaries. Meanwhile, ‘the great resignation’ has turned into ‘the great redundancy’, ending two years of talk of an ‘employees’ market’. This, too, is reflected in the equally high salaries at non-VC-backed companies and the general equality across the sectors.
In this realigned world, tech leaders and founders must be able to make informed decisions about how much they pay or are paid.
However, hot takes and headlines were not the aim of the survey. Instead, it was about offering actionable data to provide specific context to a broader global trend towards pay transparency. Globally, regulation is being introduced to force companies to reveal their salaries. Major US tech hubs such as California and New York already have these in place, while recent EU directives are ushering in a new era on the continent. As this becomes more prevalent, parity across job families and gender will become more obvious. We hope that the data in this report can enrich the results of that regulation, helping tech leaders to compare their salaries not just with specific sector colleagues but within the whole industry.
It is great to see the tech industry getting a jump on that regulation and narrowing the gap. While there’s undoubtedly a long way to go, this is something to be proud of.
We’ll be keeping the survey open, so the dataset remains fresh.
Contribute here >> Tech Leaders Compensation Survey
✨ We’re all ears if you have questions on this topic or ideas on how to further improve our research; drop me a line at michelle@creandum.com .
