As VC-backed startups continue to contend with bear-market headwinds, startup hiring and compensation have undergone a reset, according to an update from Carta.
Last year marked a startup employment contraction: There were more total job departures from companies on Carta in 2023 than there “were new hires, the first annual net contraction in at least five years.”
According to the update from Carta, a wave of layoffs that “peaked in January 2023 also contributed to the workforce contraction.”
That month, startups laid off “more than 18,000 employees.”
Startups were still hiring last year, but their priorities shifted, the report from Carta noted.
The Carta report added that employees “in engineering, sales, and operations made up a larger portion of all new hires, while job functions in customer success, support, and product accounted for a smaller portion of new hires than they did in the past.”
Compensation strategies shifted, too: Newly hired entry-level workers and C-suite leaders both saw their average salary levels “increase during 2023, while new managers and VPs saw their average salaries decline.”
At Carta, they believe it’s their responsibility “to share the insights that come from an unmatched amount of data about the private market.”
The data shared reportedly “comes from thousands of CTC customers with over 500,000 data points used by Carta Total Compensation.”
Other metrics in the report, such as those that “describe employee movement, derive from the aggregate pool of more than 1 million employees currently working for the 43,000 startups that use Carta to manage their cap tables.”
H2 2023 key takeaways:
- Hiring halved last year: Companies on Carta made 267,818 new hires in all of 2023, a far cry from the 523,487 hires made in 2022 and 525,827 hires from 2021.
32% of new hires from 2022 departed their companies: Even among very recent hires, employee turnover has been considerable. About 32% of employees hired in 2022 are no longer with the company, and about 23% of new hires from 2023 have already moved on. - Equity packages have stabilized: The average amount of equity issued to new hires increased by 0.2% in January 2024 compared to September 2023. That’s a small change, but it’s an abrupt shift from recent history: Previously, equity benchmarks had declined by 37% between November 2022 and September 2023.