Compensation Infrastructure for Startups: How Pay Plans Evolve as You Raise Capital

Building compensation infrastructure for startups is one of the most overlooked foundations of a growing company—but what does putting it in place really mean? It means building a clear job architecture and a structured salary framework. It also means moving away from ad-hoc decisions—whether driven by what an individual candidate asks for or by setting pay position by position—because those one-off choices tend to create problems down the road.

It’s never too early to put this infrastructure in place. The sooner you do, the stronger your foundation will be. That way, you and your team can spend less time wondering whether pay is competitive and more time focusing on what you do best: building the business.

What This Looks Like in Practice

In a recent client deliverable, we created an Engineering Pay Plan so the company could plan for how the mix of cash and equity would shift as they raised capital—moving from less than $15 million in total financing to the $15–$49.9 million range.

The data shows a clear, predictable pattern:

• As companies move from under $15 million in total financing to $15–$49.9 million, total cash increases roughly 10% at both the median and 75th percentile.
• At the same time, equity decreases by more than 55% at both percentiles.

This transition—from lower cash and higher equity to higher cash and lower equity—is exactly what you’d expect as financing increases. The shift itself isn’t surprising. But understanding the magnitude of these changes, and planning for them, requires a framework built on accurate, reliable market data.

Why a Scalable Salary Structure Matters

This is how a scalable, strategic salary structure works: as the company scales, the pay plans evolve with it, in line with the market. Rather than renegotiating compensation reactively at each stage, companies with the right infrastructure already know how cash and equity should move as they grow.

Learn more about Thelander Pay Plans here.

Categorised in: Data Drops

This post was written by jthelander