Start-ups couldn't offer the same high salaries as big tech companies. Now, with companies like Meta and OpenAI willing to pay multi-million dollar salaries in the midst of the AI race, the compensation gap has become even wider.
However, early-stage startups are not doomed. Founders and experts speaking at TechCrunch Disrupt 2025 say creating a generous, fair and flexible compensation strategy will allow you to offer a competitive compensation package and give you room to adjust your approach as you grow.
In any case, startups shouldn't try to compete with big tech companies, Yin Wu, co-founder and CEO of stock management software Pulley, said on stage at TechCrunch Disrupt in October. She added that established technology companies and startups typically don't attract the same potential candidates to begin with.
Wu said startups should do as much charity work as possible with their compensation packages, even though they don't have the ability to match salaries at big tech companies.
“My pretty strong opinion when it comes to startup equity is that you should be more generous than you think you are,” Wu said. “I don't think that's likely. If the company was really successful, you'd look back and say, 'Hey, I gave away too much stock to everyone in my company who was really trying to make this company successful.'”
Randi Jambowitz, head of talent at 645 Ventures, agreed. Jakubowicz added that if startups want to make competitive offers, they need to set clear goals for the people they hire to make sure they're commensurate with the compensation they're getting.
“Hold your employees accountable and make sure they understand what the implications are in terms of the vesting cliff,” Jakubowicz said of when employees take ownership of stock. “Here, if you don't move quickly if someone underperforms, you're incurring capital that you'll never get back if that person is fully vested. Make sure there's very clear accountability.”
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Panelists also emphasized that companies do not need to solidify their compensation and equity strategies from the beginning. Rather, startups should ensure from the outset that their approach is fair, so that even if they want to make changes, they have the right foundations to do so without getting caught up in legal trouble or internal politics.
For Wu and her company Pulley, that meant setting standards for compensation packages. Wu said the company pays a range of salaries for each role, regardless of a potential employee's location, and consistently structures compensation packages that provide 90th percentile equity.
“This framework has allowed us to grow and say, 'Great, the company continues to do well, so the actual number of shares you receive will be different because the company is valued differently, but that framework still applies.'”
Rebecca Lee Whiting, founder and fractional general counsel at Epigram Legal, added that having these standards in place will help companies avoid potential legal pitfalls in the future. For example, it helps companies avoid offering unequal pay between candidates of different genders, which is something all companies should ethically avoid, but is also illegal in states like California, Whiting noted.
Whiting, Wu and Jakubowicz all agreed that as long as founders approach structuring compensation packages with fair intentions, everything else can be adjusted or changed in the future.
“I think it's really important to not just think about the process, but to think about who the people you're hiring are and what will motivate them to take that offer,” Whiting said. “It's not something you have to achieve right out of the gate. You have to realize that you're going to have to do some cleanup after Series B, and that's OK. But don't try to be perfect the first time when you hire your first few people.”