Key Takeaways
- AI startups are increasing base pay to attract top talent.
- Software engineers at venture-backed startups are now paid a median base salary of $200,000, a 25% increase from 2022, per salary data platform Levels.fyi.
- One recent graduate was offered $400,000 in base salary for a software engineering position.
Silicon Valley is known for its lavish perks to attract top talent, such as nap pods and free slippers in its “no shoes” offices. Now, as competition for top AI talent intensifies, startups are turning to a more straightforward incentive to win talent wars: exceptionally high compensation packages.
Levels.fyi, a platform for salary data, reports that software engineers at venture-backed startups are now paid a median base salary of $200,000, a 25% increase from 2022. In some instances, recent computer science graduates are receiving offers exceeding $300,000 a year. These compensation levels were once reserved for veteran engineers at major tech companies, Chris Vasquez, CEO of the startup recruiting firm Quantum, recently told The Wall Street Journal.
“Prior to this, I’d probably never seen anyone over $300,000 on base salaries at seed companies,” Vasquez said. Now, “they’re able to take home FAANG [Facebook, Amazon, Apple, Netflix, Google]-level cash comp.”
Vasquez also noted that he has begun to see performance-based cash bonuses at several startups. Workers who hit certain milestones could reap cash bonuses equal to 30% of their salaries, he said.
Meanwhile, recent computer science graduates from top-tier schools with only one or two years of experience are seeing salary offers between $250,000 and $300,000, according to Vasquez. A few years ago, the same positions would offer base salaries closer to $170,000, he said. He gave the example of a math competition winner with nine months of professional experience who received $400,000 in base salary for a software engineering position. In another case, an MIT graduate received an entry-level software engineering role that pays $220,000 in base salary.
Why startups are offering higher salaries
Startups have traditionally offered lower base salaries offset by substantial equity packages. The goal was to keep employees invested, with the promise of a significant payout after an acquisition or initial public offering.
Today, high-growth AI startups are awash with venture capital. Pair that with an intensely competitive talent market, and compensation packages now feature larger cash components.
“Everyone wants to draw from a limited pool,” Michael Zhang, CEO of Candidate Labs, a recruiting firm that has placed talent at top startups, told the Journal. “What would have been eyebrow-raising compensation a year ago is now considered okay to pay, no questions asked, by many recently funded startups.”
Many startups are prioritizing lean operations and compact teams, which means the employees they hire must be top-tier talent. The result, according to Zhang, is a split economy: the top 5% to 10% of candidates are weighing multiple offers, while the rest are finding it increasingly difficult to secure positions.
It’s not just software engineers who are facing this split. Other roles that are paying well for top talent include sales representatives, product managers and marketers.
Meanwhile, other entry-level job seekers struggle to land positions. A report last year from venture capital firm SignalFire found that big tech companies like Meta, Microsoft and Google recruited fewer recent graduates in 2024 compared to previous years. New graduates accounted for just 7% of new hires in 2024, down 25% from 2023. SignalFire indicated that AI is a significant reason for the decline in entry-level tech roles.
Employers are also conducting mass layoffs, citing AI efficiencies. In January, Amazon cut 16,000 jobs as it deepened its investments in AI. The restructuring aimed to “reduce layers, increase ownership and remove bureaucracy.” About 50,000 workers lost their jobs to AI in 2025.
Key Takeaways
- AI startups are increasing base pay to attract top talent.
- Software engineers at venture-backed startups are now paid a median base salary of $200,000, a 25% increase from 2022, per salary data platform Levels.fyi.
- One recent graduate was offered $400,000 in base salary for a software engineering position.
Silicon Valley is known for its lavish perks to attract top talent, such as nap pods and free slippers in its “no shoes” offices. Now, as competition for top AI talent intensifies, startups are turning to a more straightforward incentive to win talent wars: exceptionally high compensation packages.
Levels.fyi, a platform for salary data, reports that software engineers at venture-backed startups are now paid a median base salary of $200,000, a 25% increase from 2022. In some instances, recent computer science graduates are receiving offers exceeding $300,000 a year. These compensation levels were once reserved for veteran engineers at major tech companies, Chris Vasquez, CEO of the startup recruiting firm Quantum, recently told The Wall Street Journal.
“Prior to this, I’d probably never seen anyone over $300,000 on base salaries at seed companies,” Vasquez said. Now, “they’re able to take home FAANG [Facebook, Amazon, Apple, Netflix, Google]-level cash comp.”
