Technology & Entrepreneurship
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Technology & Entrepreneurship

Compensation for Startups

July 2, 2012

I am asked all the time about compensation. How much should I pay my CFO? My CEO? My… you fill in the blank.

The problem is that we are all prisoners of our own experience. I have represented a lot of technology startups over the years, but it is still not a representative sample. Time is also a factor the “going rate” (if there can be said to be such a thing) was different ten years ago that it is today. 

Perhaps some of the larger more active VC funds can get a representative current sample by looking at their existing portfolio companies. But, most people really need industry data. 

So, here is a web site CompStudy that looks like it may fill the data gap, and you can get their data. Below are two paragraphs taken from the CompStudy site.

The CompStudy surveys focus on private companies in the Technology and Life Sciences industries. We have conducted these surveys annually since 2000. (I collaborate on the surveys with Ernst & Young, law firm WilmerHale, and executive-search firm Park Square.) Last year, more than 800 private startups participated, giving us an extremely detailed dataset to help you understand the market for executive talent. The first decade of CompStudy surveys – which included almost 10,000 founders from 3,600 startups – served as the data backbone of my book, The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup.

As in past years, survey participants will receive free access to our sophisticated reporting/analysis website, including salaries, bonuses, and equity holdings for C-level and VP-level executives. To qualify for the free access, please complete the questionnaire by June 30th, 2012.

If this survey lives up to its promise, it will be very useful.

I can’t help but note that a similar phenomena sort of exists (that is lack of actual data) with respect to other aspects of startups: for example, terms and valuation. 

Now, for some of this data you can go to our publication Perspectives (that covers New England, and shortly New York as well) or a similar publication from Fenwick & West (that covers the valley). But although we (and I believe Fenwick) track every VC financing in our region, we don’t publish everything we know (I don’t believe Fenwick does either – although I have never discussed this with any of their attorneys).

So, when you hear someone say market is ….. You are probably hearing their subjective impression and, human nature being what it is, an impression designed to support the speaker’s agenda – good, bad or indifferent.