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Recruiter fees are also a big deal, according to a discussion on Twitter among founders on Thursday.
One Silicon Valley founder spent $500,000 in recruiter fees in 12 months to hire 15 engineers, tweeted startup founder Sten Tamkivi, CEO of Teleport, a startup building software to help people re-locate for new jobs or work remotely.
So that startup paid out over $30,000 per head to the recruiter. And that's typical. Headhunters often charge 20-30% the entire package: salary, stock, and any signing bonus.
The average salary for a software engineer in Palo Alto, heart of Silicon Valley, is $108,000, according to Glassdoor. But the big companies in that area tend to toss in cash bonuses (often another $15,000) and stock (another $50,000+).
So call that $150,000 per engineer + $30,000 to the recruiter, and you can start to see how startups can burn through some cash.
A fellow SV founder just shared: $0.5M in _recruiter fees_ in 12 months to hire 15 engineers. https://t.co/lpuLgy9k7F
- Sten Tamkivi (@seikatsu) July 30, 2015@seikatsu 30k per head - sounds about right, no biggie
- Alex Lomizov (@sashalomizov) July 30, 2015@sashalomizov @seikatsu recruitment fees often circa 30% of package for the role - *not just* salary but also bonus, equity, bens.
- Heather Galloway (@GallowayHeather) July 30, 2015@seikatsu @BenedictEvans $150k salary, 20% recruiter fee - that's been consistent % for last 15 years (ex a few down years like 2002,2008)
- Gordon Shephard (@ghshephard) July 30, 2015