Late Stage Companies Winning the War for Talent

Ever wondered how much less seed stage companies pay than late-stage companies with loads of cash?  Here at Hired, we looked at thousands of offers to interview to see how companies at different funding stages stack up. Note, that our data is heavily biased towards the Bay Area and NYC markets, where the majority of our 600+ employers are based.

Whether because of salary, prestige, or credibility – our developers accepted interviews with large companies 13% more often than at very early companies.  While everyone can succeed in hiring, those without deep pockets or famous brands need to find creative ways to engage talent.

While we’re on the topic of compensation, how big of a difference do deep pockets make?  If we look at offers near the same salary, seed stage companies do just as well as Series B companies for salaries at or above $120,000 – both have roughly 50% of all interview requests accepted. Below $120,000, however, seed companies have a 40% acceptance rate, versus around 50% for Series B+.

As you can see, paying market rates opens up 15% more candidates. When looking at the total cost of a hire – including all external costs, and number of hours spent interviewing, trying to saving $10K or $20K/year in salary can really be a case of being “penny wise, pound foolish”.

Especially in a competitive market, where getting 5-15x recruitment emails per week is not uncommon, even if you do manage to eventually find people willing to personally sacrifice and take below-market salaries, it’s likely that they won’t stick around for nearly as long. Given limited management time & resources, it’s usually much better to pay market salaries and fill your open roles in 30 days after talking to 7-10 candidates vs. spending months hunting and interviewing dozens of people in order to find that one “unicorn”.

Next up, we took a look at salary data for two different job titles – “Software Engineer” and “Senior Software Engineer” and found a big difference.

Seed stage companies pay, on average, below market for both senior and non-senior talent, but the difference is most pronounced for senior talent.  While a senior engineer can expect around $135,000 at a larger company, seed companies typically want to pay around $115,000.  Salary isn’t everything in compensation – almost all startup offer letters include a section on equity. Smaller companies typically offer more equity on a percentage basis, but the value of said equity is usually very small.  They must convince candidates of some existential benefit – whether company culture, opportunity for advancement, or the chance to be part of the “next Facebook”.

Despite these broad proclamations about market average, we know that not all companies are created equal, and as such not all companies pay the same. If we look at the distribution of offer size for senior engineers, we find that almost all offers are at or above $120,000 except from seed funded companies.

If you think you’re senior, aren’t making at least $120,000, and want to live in SF or NYC, you might want to consider a Hired auction!

While there isn’t as big of a difference between stages for non-senior engineers, we find that almost everyone in our markets makes at least $100,000.  No wonder San Francisco rents are through the roof!

If you got this far, you’re probably wondering what happens when a candidate receives several offers at different compensation levels, from different types of companies.  Don’t worry – we’ve also wondered the same thing.  Stay tuned for an in-depth analysis of candidate preference in a competitive environment.