Most startups have to pay interns: under the Department of Labor's primary beneficiary test, an intern who counts as an employee is owed at least minimum wage. The post's chart is older and undated; for a current benchmark, NACE's 2025 Guide to Compensation for Interns & Co-ops puts the average hourly wage for bachelor's degree level interns at $23.04.
Nathan Parcells, CMO, and Ashley Mosley, Community Manager, collaborated on this post at InternMatch.
You’ve shipped your first product and users are raving about it. With plans to add more features, it’s time to expand the team by hiring a few interns. Sound like a familiar scenario? It’s one that most startups – whether Venture-backed or bootstrapped – face. Chances are that when you started your company, someone advised you on how to make hiring decisions for key employees, but they probably didn’t cover much about hiring interns.
From our experience at InternMatch, there’s no one-size-fits-all approach when it comes to hiring and deciding on compensation for interns. Much of it depends on factors like location of the internship, company size, experience and the type of internship position. For instance, because of their close proximity to tech companies like Google, Meta and Apple, engineering interns in the Bay Area tend to get paid more than interns anywhere else. Competing for talent with these companies mean: offering paid internships, selling students on the startup experience and building a unique and engaging internship program.
We cover some of our best practices for hiring and compensating interns below.
Do I HAVE to pay my interns (what does the law say law)?
There has been a lot of discussion on this subject. Use the Department of Labor’s primary beneficiary test to determine if the law requires you to compensate your intern(s). The test looks at the “economic reality” of the relationship across seven factors, and an intern who is found to be an employee is entitled to minimum wage and overtime. Interns at startups tend to take on lots of responsibility, so many will count as employees. Rules also vary by state, so confirm with counsel.
Click here for a list of minimum wage requirements by state.
How Much Does Top Talent Cost?
If you want to attract top talent to your company and distinguish your internship from competitors, then you should be prepared to compensate interns for their hard work and their time. The chart below gives a few industry averages for various internship roles at startups/tech companies, from when this post was written. Current rates are likely higher, so treat these as a floor and check recent data.
| Position | Top 25% (hourly) | Top 5% (hourly) |
| Communication/PR | Minimum Wage | $12-$15 |
| Marketing | Minimum Wage | $12-$15 |
| Comp. Sci./Engineering | $12 | $15-$25 |
| MBA | $12 | $15-$20 |
| Non-Profit | Unpaid/Small Stipend | $12 |
Additional reasons to pay students:
- Most top students will have multiple paid internship offers and will likely be able to secure an internship elsewhere if yours doesn’t pay
- Unpaid internships may exclude a lot of top applicants, who need some form of payment, from applying for an internship at your company
- Students are more likely to accept full-time employment from companies who paid them during their internship
More than One Way to Compensate
There’s more to an internship offer than just compensation. Make sure to sell the startup experience and the huge educational component to students as well. Such as learning a new coding language and software or the highly talented team of people they will get to work with and have access to.
Most students interested in startup internships, know they have a lot of value to offer – laidback culture, free food, game rooms, networking events, tech talks and the chance to take ownership of exciting projects and product developments (and much more). All of this should be communicated and reiterated to prospective internship hires as you discuss compensation and the benefits of working at your company.
But We’re Bootstrapping and Broke
Don’t have a lot of resources to hire an intern? Some companies use alternatives like:
- Federal Work Study – Students who qualify for financial aid are eligible. Federal and state programs help compensate an intern’s salary, so the school may cover a large share of the cost. Check the current terms with the school.
- Academic Credit – Students aren’t a huge fan of this but as long as you’re providing a real educational experience, it can work, but rules vary, so confirm with the school and counsel
- Small Incentives – Try offering interns a small stipend – either weekly or at the end of the internship, reimbursement for travel expenses or gift cards to their favorite stores (Amazon, iTunes and Starbucks tend to be favorites.)
What about offering equity?
This is very hard to defend in a cap table and equity inherently is geared to people who have a long-term commitment to your company – since it incentivizes them to help with the companies long-term value. However, if it’s a tool to get interns to sign on board full-time, this might make sense. Try hard to pay interns with cash, especially until they have proven their worth or solidified their commitment to your company.
In general, internships can be highly rewarding for both students and employers. College students enjoy seeing the immediate impact of their work and companies get to invest in the long – term growth of their team.
Founders Network is a peer mentorship community for tech startup founders. If that fits where you are, request an invitation.
Frequently asked questions
Do startups have to pay interns?
In most cases, yes. The post points to the Department of Labor's primary beneficiary test: an intern who is found to be an employee is entitled to minimum wage and overtime. Rules vary by state, so confirm with counsel.
How much do tech startup interns get paid?
The post's older, undated chart lists hourly pay for the top 25% of interns at minimum wage to $12, and for the top 5% at $12 to $15 in marketing and PR, $15 to $20 for MBAs and $15 to $25 for computer science and engineering. For a current benchmark, NACE's 2025 guide puts the average for bachelor's degree level interns at $23.04 an hour. Bay Area engineering interns are said to earn more than interns elsewhere.
How can a bootstrapped startup afford an intern?
The post suggests Federal Work Study, which can cover part of an intern's pay, academic credit, or small incentives such as a stipend, travel reimbursement or gift cards.
Should startups pay interns in equity?
The post says equity is hard to defend on a cap table and is meant for people with a long-term commitment. It suggests it may make sense as a way to bring interns on full time, and advises paying cash otherwise.
