Salaries growing slower

The largest cost in a software startup is personell. About 70 % is typical, according to OnlyCFO. This also explains why loss-making companies making layoffs often need to cut 20-30 % of staff to become profitable, as that lowers total costs with 15-20%.

An interesting report from Carta shows that in aggregate its customers (mostly startups and technology companies) started shrinking its total headcount in September.

The layoffs has also led to that salaries for directors and above has stopped growing and even turned slightly negative.

Slower salary growth is confirmed by another data source in OnlyCFO’s article, even if that shows a more moderate slowdown from almost 10 % increase in H1’22 to a 5.5 % increase in the beginning of ’23.

Author: Henrik Torstensson

Partner at Alliance VC. Investing in Nordic early-stage tech startups.

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