Startups have never been able to offer the same sizable salaries as big tech companies. Now with companies like Meta and OpenAI willing to pay million-dollar salaries amid the AI race, the compensation divide has grown even larger.
Early-stage startups are not doomed though. If they develop a compensation strategy that is generous, fair, and flexible, they can offer competitive compensation packages and give themselves room to adjust their approach as they grow, according to founders and experts who were onstage at TechCrunch Disrupt 2025.
Startups should not try to compete with big tech companies anyway, said Yin Wu, the co-founder and CEO of equity management software Pulley. She added that a stable tech company and a startup do not generally attract the same potential candidates to begin with. Startups should instead be as charitable as they can in their compensation packages, Wu said, regardless of their inability to match a big tech company’s paycheck.
She expressed a strong opinion that when it comes to equity for a startup, you should be more generous than what you think you should be. She believes it is unlikely, if the company is really successful, that you will look back and say you gave away too much equity to everyone who was trying to make the company successful.
Randi Jakubowitz, the head of talent at 645 Ventures, agreed. Jakubowitz added that when a startup is looking to make a competitive offer, they should set clear goals for the person they are hiring to ensure that hire lives up to the compensation they are getting. She advised making sure you hold them accountable and understand the implications from a vesting cliff standpoint, which is when employees gain control over their equity stakes. She noted that if you do not move quickly when someone is underperforming, that is equity you will never get back if they are fully vested, so clear accountability is essential.
The panelists also stressed that companies do not need to get their compensation and equity strategies set in stone from the start. Startups should instead ensure their approach is fair from the beginning, so even if they do want to change, they have the proper foundation to do so without setting themselves up for legal trouble or soured office politics.
For Wu and her company Pulley, that meant setting standards around compensation packages. Wu said the company pays a set range for each role regardless of where a potential employee is based and consistently builds compensation packages with equity offerings in the 90th percentile. Having this framework allowed them to grow and adjust the number of shares given as the company’s value changed, while still applying the same consistent framework.
Rebecca Lee Whiting, founder of Epigram Legal and fractional general counsel, added that having these standards helps companies avoid potential legal pitfalls down the line. For instance, it helps companies avoid offering unequal pay across candidates of different genders, which is not only unethical but also illegal in states like California.
Whiting, Wu, and Jakubowitz all agreed that as long as founders approach building their compensation packages with fair intentions, everything else can be adjusted or changed down the line. Whiting said it is important to think about who you are trying to hire and what will incentivize them to take the offer. She noted that compensation strategy is not something you have to get perfectly right from the start, and you will likely have to make adjustments after the Series B funding round, which is okay.