If you find that the structure and predictability of a typical 9-to-5 are just too strict or too predictable, you might be interested in working for a startup. Joining the few, the proud, and the entrepreneurial can be risky, so it’s important that you know what you are getting into early on.
As you plow through updates to your resume/CV and polish up your portfolio, after you run through a couple of your best power introductions and start preparing for interviews, make sure you are ready to ask some tough questions of your own. The answers you get could make or break your decision.
1. Who else is in the marketplace; what trends are you seeing?
Rather than having them recite the company mission or its unique value prop and key characteristics of the minimum viable product, ask for an outward perspective. Who are their competitors? Is there data on hand about market share, and do they have a plan to address possible threats (proactively v. reactively) going forward? Even if you have an idea of what the answer is, give them an opportunity to share it with you.
2. Who are your current investors/VCs?
Having a strong sense of not just who’s who, but also who’s willing to invest in the business can reveal a lot. As you consider their answer, ask yourself: is the group diverse, representing a range of business interests across multiple sectors; or, is the group more targeted (and small), with narrower interests and business acumen?
3. How is percent of ownership divided, and what stock options are available?
With early stage companies, whether they are tight-pocketed or offer a robust vesting package, it’s important to know how many slices of pie there are and the size of each slice. Answers to this question will give you an idea of how certain critical decisions are made, and what’s at stake. It can also give insight into when and if there may be opportunity for a new seat at that table (for you).
4. What is the current valuation of the business?
This is a big one but be careful not to let it be the metric on which you base your final decision. Understanding valuation – what the market will bear for a new business, what someone is willing to pay for acquisition – gives you an idea of where it stands relative to how long it’s been alive. It can also help you see how bright or bleak a future’s in store if acquisition is the company’s end-game.
5. What is the burn rate; how does the financial forecast look?
Lastly, knowing how quickly a startup runs through its operating capital is key before making the leap to work with one, for obvious reasons. If the answer to this question doesn’t come as quickly as you hope, or the interviewer declines to answer, you may wish to consider a different opportunity.
Working for a startup can be highly rewarding. It can also be a challenge in terms of financial security and general business longevity. Before taking the gig, make sure you’ve done your research. If you are actively seeking employment with a startup, it might be helpful to know what employers are looking for from you. For a sense of what to expect, click here.
Contact EGFS with questions about working with a startup or outsourcing financial services.
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