How did headcount change and why?
№ 214 · Headcount waterfall
Definition
MetricNet headcount change decomposed into new roles, backfills, voluntary exits and involuntary exits
UnitPeople per period, with hires per departure as the summary ratio
Bars from opening headcount through hires, attrition, and transfers to closing headcount. Pull from HR each quarter. Read net direction (terminations vs hires) and the size of each bar. Example: 280 start + 42 hires - 28 terminations = 294 end (net 14 growth).
Benchmarks
| Bottom 30% | Median | Top 30% |
|---|---|---|
| Below 0.9 hires per departure | 1.05 hires per departure | 1.3 or more hires per departure |
Venture-backed private companies on the Carta platform, 2024 to January 2026, all hires and departures logged on the platform · Two different populations sit behind this card and they answer different questions. Carta covers venture-backed private companies and shows the hiring-to-departure ratio falling from 1.75 across 2022 to 1.06 by 2024, with sector spread from 1.3 in hardware to 0.6 in education. BLS JOLTS covers the whole US economy and shows a hires rate of 3.4% a month against a separations rate of 3.4%, quits at 2.0% and layoffs at 1.1%, so the economy-wide picture is near replacement-level churn. The Carta figures are platform-logged rather than survey-reported, which makes them timely but sensitive to reporting lag, and Carta itself notes recent months shift as more movement is recorded. The involuntary and voluntary split matters more than the net number: Carta's January 2026 reading was 12,161 voluntary departures against 8,217 layoffs, with layoffs down 57% from the January 2023 peak but still well above pre-2021 levels.
| Category | Bottom 30% | Median | Top 30% |
|---|---|---|---|
| Hardware and medical devices | 1.0 | 1.2 to 1.3 | 1.4 hires per departure |
| Software and business services | 0.9 | 1.05 | 1.3 |
| Education, consumer and gaming | Below 0.6 | 0.6 to 0.8 | 0.9 |
When it looks bad
The gross hiring bar is tall, the exit bar is almost as tall, and the net bar is near zero, so the recruiting function is running at full load to stand still.
38 hires and 35 departures across a year for a net gain of three people, against a recruiting spend of roughly $190,000.
What to do about it
- Split the hire bar into new capacity and backfill before the plan is signed. A headcount plan that reads as growth is often two thirds replacement, and Carta's ratio of 1.06 hires per departure across 2024 shows how common that is.
- Separate voluntary from involuntary exits on the chart. They have different owners and different fixes, and the mix moved sharply in recent years, with Carta showing layoffs down 57% from peak while voluntary departures fell 40%.
- Track the ratio by function monthly rather than company-wide quarterly. Sector spread in the Carta data runs from 1.3 to 0.6, and internal function spread is usually wider than that.
- Reconcile the waterfall against payroll before it goes to the board. Net headcount and net payroll diverge whenever the leavers and joiners sit at different levels, and the payroll line is the one finance will act on.
Sources
- Carta Average Series D headcount fell 29% from its 2023 peak to 131 employees, Series B from 53 to 45, and median seed team size is four. In January 2026 there were 12,161 voluntary departures against 8,217 layoffs. Voluntary departures are down 40% from the June 2022 peak and layoffs down 57% from January 2023. carta.com ↗
- Carta Companies made 1.75 new hires per departure across 2022, falling to 1.06 by 2024. Net headcount rose 24,450 across the first nine months of 2024, about 2%, then fell 10,397 in the fourth quarter. carta.com ↗
- Carta Hardware startups made 1.3 new hires per departure and medical devices 1.2, the highest of any sector. Education ran 0.6, a third straight year of net headcount decline. Engineering was 29.7% of all new hires. carta.com ↗
- US Bureau of Labor Statistics Job openings 7.4 million, hires 5.3 million, total separations 5.4 million, quits 3.2 million and layoffs 1.8 million. Quits rate 2.0% per month, layoffs rate 1.1%, total separations rate 3.4%. bls.gov ↗
- High Alpha Later-stage companies approach $400,000 ARR per employee, close to public SaaS medians. Engineering was the function most often cut, with 42% of companies reporting reductions. highalpha.com ↗
- Alloy Partners with High Alpha Median ARR per employee across public SaaS companies tracked by Meritech was $393,000. Median headcount at $20M to $50M ARR fell from about 225 in 2022 to under 150 in 2025, a 42% reduction. alloypartners.com ↗
- Employ Inc. Time to fill fell from 67.7 days in 2024 to 63.5 days in 2025, while time to hire edged up from 45.7 to 46.2 days. globenewswire.com ↗
- Pin reporting Mercer 2025 US Turnover Survey and SHRM 2025 Benchmarking US voluntary attrition averaged 13% in 2024 to 2025, down from 24.7% in 2022. Retail and wholesale run 26.7% against 8.2% in insurance. SHRM's median voluntary turnover was 9% with a 13% average. pin.com ↗
- Ashby 15 applicants are interviewed per hire, 18 technical and 13 business. Interviewer hours run 21 to 29 per technical hire and 16 to 18 per business hire. At startups under 25 employees, time to hire is 42 days with a recruiter involved versus 62 days without. Offer acceptance sits near 80%. ashbyhq.com ↗