Levels.fyi: median base-salary offers for US software engineers at VC-backed startups have risen 25% to $200K since 2022; total compensation has risen just 18%
Young tech companies once might have complemented lower salaries with generous equity packages. Now they're upping base pay.
Context & Ripple Effects
Startup compensation had already been moving away from ownership: Carta reported that workers were receiving materially less startup equity while average salaries were broadly flat through 2024. The new Levels.fyi data show the cash side has since taken on more of the retention burden.
The change also follows an earlier period in which large employers raised cash ceilings, including Amazon's increase in maximum base pay. For VC-backed employers, matching cash expectations matters because equity is no longer doing as much of the offer-package work.
First-order effects
- US software-engineering candidates at VC-backed startups receive higher guaranteed pay, while the smaller increase in total compensation implies equity represents a reduced share of the package.
- Startups hiring engineers face higher recurring payroll commitments and less flexibility to use equity as the principal offset for below-market cash pay.
Second-order effects
- Competing startups will face pressure to reset salary bands for experienced technical hires, potentially raising hiring costs even where headcount plans do not expand.
- Higher fixed compensation can tighten the trade-off between recruiting pace and cash preservation, making companies with deeper funding better positioned to compete for engineers.
Third-order effects
- If sustained, this shifts startup talent economics from venture-style upside toward more cash-intensive employment, increasing the importance of financing capacity in technical hiring.
- A wider divide could emerge between well-capitalized startups that can meet cash benchmarks and smaller companies that must differentiate through role scope, mission, or residual equity upside.
The trend: Startup compensation is being repriced toward guaranteed cash as equity becomes a less reliable recruiting currency.