Startup Recruiting Guide
Contingency vs retained search: which is right for a Seed-stage startup?
By Arshnoor Kohli, Founder, Vektor
Last updated
Published · 7 min read
Direct answer
Most Seed-stage startups should use contingency search: you pay only when a candidate starts, typically 18 to 25% of first-year salary, with 2 to 8 week fill windows. Retained search makes sense for rare C-level or highly confidential mandates where you want exclusive focus and will fund a retainer up front.
Fee structure, risk, and timeline differences when you are still founder-led and runway-sensitive.
The cash-flow difference
Contingency: no fee until start. Retained: you pay a portion up front whether or not the search closes on your timeline. At Seed, that retainer competes with product and runway.
Traditional contingency shops still often price at 25 to 30%. Startup-focused contingency in the 18 to 25% band keeps spend forecastable without the enterprise markup.
| Model | Cash at kickoff | Cash at start | Risk holder |
|---|---|---|---|
| Contingency | $0 | 18–25% of salary | Recruiter (mostly) |
| Retained | 33–50% of fee | Remainder | Shared / client-heavy |
When retained still wins
Use retained for CEO/CTO search after founder transition, board-driven confidential replacements, or roles so rare that you need exclusive dedicated capacity for months.
Do not default to retained for your first senior engineer or AE. Those seats are contingency-native if you have a clear JD and interview loop.
Accountability signals
Ask for pay-on-start, weekly pipeline updates, and a written replacement window. A 90-day replacement guarantee is a concrete alignment mechanism contingency firms can offer that retainers alone do not.
If a firm wants a large retainer for a Seed IC seat, pressure-test whether the economics serve your stage or their legacy model.
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