Hiring at a startup is expensive in ways founders often underestimate. Burn rate is what determines whether the company lives long enough to find out.
Every new hire increases monthly burn. Recruiting costs come out of the same cash balance you are protecting. Both have shifted sharply in the past two years as funding markets tightened and startups scaled back headcount at every stage.
This piece covers what hiring costs at seed, Series A, and Series B; what burn looks like at each stage; and where the numbers have moved since the 2021 growth peak. Data is drawn from Carta's compensation and headcount reports, Kruze Consulting's burn rate research, and SHRM's 2025 recruiting benchmarking study.
For practical guides on keeping hiring costs manageable at early stages, see our resources on startup virtual assistants, startup services, and startup statistics.
How headcount has changed at each funding stage
Startup teams are smaller than they were three years ago. The contraction is consistent across every stage.
Carta tracked headcount at the time of funding close across its platform of 35,000+ companies. In H1 2024, seed-stage startups had an average of 5.3 employees at funding close, down from 6.9 in H1 2021 -- a 23% decline in three years. Series A companies averaged 15.6 employees, down from 17.6 in the same period. Series B teams fell from 53 to 45 employees on average. (Carta, "Why Startup Headcounts Are Getting Smaller," 2024.)
The decline is partly intentional. Capital efficiency became a priority after 2022 as funding rounds got harder to close and investors began scrutinizing burn multiples more carefully. Founders responded by hiring slower and doing more with smaller teams.
When you are hiring employee number 5 at a seed company rather than employee number 20, every individual hire represents a larger share of total burn, and a bad hire carries more risk. That math shapes why cost-per-hire data matters more at the seed stage than anywhere else.
What hiring actually costs at early-stage startups
Cost per hire
The baseline for cost per hire in most sectors is $5,475 for non-executive roles and $35,879 for executive roles, according to SHRM's 2025 Recruiting Benchmarking Report. The executive figure is up 21% from 2022, driven by higher salary levels and a market where senior hiring stayed competitive even as overall volume dropped.
Early-stage startups tend to run higher than the general benchmark. Betts Recruiting's analysis puts average cost per hire at roughly $12,000 for early-stage companies, falling to around $6,000 for later-stage companies with more established hiring infrastructure. Include indirect costs -- manager time, onboarding overhead, productivity ramp -- and the range runs from $7,500 to $22,000 per hire. (GoHire, "The Hidden Costs of Recruiters for Startups," 2024.)
The gap between early and late stage is mostly a sourcing problem. Early-stage companies rely more on agencies, which charge 15 to 30% of first-year salary per placement. A Series A startup hiring five engineers through traditional agency channels can spend $120,000 or more in recruiting fees alone in six months. Fractional recruiting arrangements or in-house sourcing for the same hires typically runs $40,000 to $60,000. (Dover, "Tech Recruiter Fees in 2025.")
Time to hire
SHRM's 2025 data puts the industry average at 36 days per hire. Companies with less structured hiring processes report averages closer to 58 days. Every open position carries an implied cost of $4,000 to $9,000 per month in lost productivity, overtime redistribution, and delayed timelines. At an early-stage startup with five or six people, a senior engineering role sitting unfilled for two months has a disproportionate effect on output.
Salary benchmarks by stage
Seed stage
Kruze Consulting analyzed compensation data from 450+ seed-stage startups for a December 2024 report. Mid-level engineering salaries at seed companies in Bay Area markets ran $132,000 to $149,000 in cash compensation. Product managers ranged from $130,000 to $185,000. Mid-level sales roles ran $80,000 to $110,000. Outside the Bay Area and major tech markets, comparable engineering roles shifted down to $90,000 to $130,000. (TechCrunch, December 2024, citing Kruze Consulting and Carta data.)
CEO salaries at seed stage averaged $132,000 per year, based on Kruze Consulting's startup compensation benchmarks. Founding CTOs averaged $139,000. Non-founding CTOs, typically brought in as the company scales, averaged $213,000.
Series A and Series B
Carta's H1 2025 compensation data puts average startup salaries up 5.8% since April 2022. AI and ML engineering roles rose between 5.4% and 9.1% over the period from January 2024 to June 2025. Product managers and software engineers average around $189,000 for new hires at growth-stage companies, the highest of any traditional functional area. CEO salaries reach approximately $227,000 at Series B.
Equity tells a different story. Despite salary increases, equity grant sizes remain roughly 26% below pre-2022 levels. Early employees are getting more cash and less equity than their counterparts from the growth era. The first engineering hire at a seed startup receives a median equity grant of around 1.5%. By employee five or six, median grants fall to roughly 0.3%. (Carta Annual Equity Report, 2024.)
Burn rate benchmarks by stage
Pre-seed
Pre-seed companies run a median monthly burn of approximately $25,000. At this stage, most spending goes to founder salaries, infrastructure, and early product development. Teams are typically two to four people.
Seed
Seed-stage SaaS companies show a median monthly burn of $80,000 to $83,000 in Kruze Consulting's benchmarks, with wide variance: the 25th percentile runs around $42,000 per month, and the 90th percentile runs around $280,000. Sector matters a lot here. Seed-stage fintech companies have a median burn of $120,000 per month due to compliance, licensing, and integration costs. Hardware startups run a median of $200,000 per month.
Series A companies show a median monthly burn of approximately $350,000. At Series B, burn composition typically runs 42% sales and marketing, 35% research and development, and 23% general and administrative.
(Kruze Consulting, "Cash Burn Rate," 2024; ICanPitch, "Burn Rate Benchmarks by Industry and Stage," 2024.)
Runway
53.7% of venture capital investors advise portfolio companies to maintain six to twelve months of runway before beginning the next fundraise, based on a 2024 survey of 110 VCs. Another 29.6% recommend 18 months or more. Kruze Consulting recommends a minimum of 18 months for early-stage companies, with fundraising prep starting when you reach 12 months remaining.
Median startup runway has compressed since 2022. The median was approximately 16 months in 2022 and fell to roughly 12 months by 2024 and 2025. 61% of startups reported runway shrinking year-over-year in SVB's H1 2025 report. The average time between funding rounds stretched to 696 days over the same period. (ScaleUp Finance, "Startup Runway Guide 2025.")
Burn multiple: the efficiency metric that replaced growth
The burn multiple -- net burn divided by net new ARR -- became a standard VC evaluation metric after 2022 as growth rates declined and capital efficiency became the primary concern.
Best-in-class burn multiples sit under 1x. Acceptable is under 2x. The median across venture-backed companies dropped from over 4x during the growth era to approximately 2.3x in 2024, based on Scale Venture Partners data tracked by Kruze Consulting.
Most startup burn is payroll. Improving the burn multiple means either growing revenue faster per dollar spent or slowing headcount growth. Both paths put pressure on hiring decisions and increase scrutiny of whether each role ties directly to ARR growth.
Hiring volume and what changed after 2022
Carta's State of Private Markets Q4 2024 report tracked new hires across its platform through the year. January 2024 saw 27,677 new hires, down 29% from January 2023 and the lowest January figure in the decade. Net headcount across all Carta companies increased by roughly 24,450 people over the full year 2024, a 2% gain, then contracted by 10,397 in Q4 alone.
The mix of who is being hired also shifted. Nearly 20% of all new hires in 2024 were in sales, up from 14.8% in 2020. As growth stages became harder to reach and ARR became the primary investor metric, startups prioritized revenue-generating roles over engineering and product. That shift affects cost-per-hire averages, since sales roles typically move faster and carry lower agency fees than senior technical roles.
One more number that sets context: 85% of seed-stage startups in 2024 did not raise a Series A. Most seed-stage companies will not make it, and founders and investors both know it. The lean headcounts and disciplined hiring pacing reflect that.
What this means for burn planning
Hiring adds more to burn than founders often budget. Direct salaries undercount total compensation costs, and recruiting and onboarding carry their own price tags. The burn multiples VCs now expect require that every hire either directly drives revenue or creates leverage that extends runway.
Hiring slower is not just a cultural preference at well-run startups. It is what the current benchmarks require.
For startups looking to extend runway through flexible staffing models, see our guides on startup virtual assistants and startup services for options that scale without permanent headcount additions.
Sources
- Carta, "Why Startup Headcounts Are Getting Smaller," 2024
- Carta, State of Startup Compensation H1 2024 and H1 2025
- Carta, Annual Equity Report 2024
- Carta, State of Private Markets Q4 2024
- TechCrunch, "Here's What Seed-Stage Founders Pay Early Employees," December 2024 (citing Kruze Consulting and Carta)
- Kruze Consulting, "Cash Burn Rate: Calculator and Startup Runway Formulas," 2024
- Kruze Consulting, "Burn Multiple: Formula, Benchmarks and How to Improve It," 2024
- Kruze Consulting, "Calculate Your Startup's Runway," 2024
- Kruze Consulting, Startup Compensation Guide, 2024
- SHRM, 2025 Recruiting Benchmarking Report
- SHRM, State of Recruiting 2025
- Dover, "Tech Recruiter Fees in 2025: Complete Cost Guide"
- GoHire, "The Hidden Costs of Recruiters for Startups," 2024
- Betts Recruiting, Scale Guide: Cost Per Hire
- ICanPitch, "Burn Rate Benchmarks by Industry and Stage," 2024
- ScaleUp Finance, "Startup Runway Guide 2025"