Joining a startup in 2023? Here are 6 main things you need to take into consideration

Joining a startup — especially at an early stage — can be a risky bet.

But the market looks tougher heading into 2023. Although some early-stage companies are still adding talent, some of the most profitable startups have Staff shed hundreds.

As news of layoffs continues to trickle in – from big tech companies like Amazon to established financial firms like… Goldman Sachs Where should candidates look for work? and how they evaluate potential companies Not to go under?

We asked the founders what candidates should consider before joining a startup in 2023.

Look for companies with a realistic path to profitability

Stefan Bader, Cello co-founder

As capital becomes scarcer, more capital-efficient companies have higher operating margins – and investors prefer a realistic path to revenue/break-even in current market conditions.

Even more than before, candidates must understand whether the startup can show a realistic path to profitability. This requires you to educate yourself and get information from the company about things like your monthly burn rate, how much it costs to acquire customers versus how much those customers spend in the business (often expressed as the LTV:CAC ratio, or Customer lifetime value versus customer acquisition cost) and net revenue growth. Ask them for numbers. If a company isn’t open and transparent about things like the cash runway, stay clear.

“If a company isn’t open and transparent about things like the cash runway, stay clear.”

in terms of resources, Many venture capital funds have built very good content centers. These can be a good source of information on things like useful Shankarah tools (how good it looks), How is talent rewarded? (Am I being compensated well enough?) And how Evaluating early stage startups And understand Key metrics.

Stefan Bader – Co-founder of Cello, a user-driven growth platform for B2B SaaS

Understanding how the company and sector is performing

Ask the hiring manager about the company’s basic financial details: Is it profitable? What is the funding structure? If it’s VC-backed, when is the next round supposed to happen? In some cases, hiring managers may avoid these questions, which may indicate that the startup lacks transparency. It is up to the candidate to see if he wants to take the risk or not.

Then comes the bigger picture. What is the current situation of the public sector in which the company operates? Is it thriving? Or is she in danger? Decreased verticality can be an early sign of serious startup problems; Understanding this in time can prevent you from joining the sinking ship.

But then comes the risk factor. Some of us thrive in precarious environments while others seek stability. What is your risk profile? What kind of professional environment are you looking for? And if risk is what you want, make sure you are rewarded properly (your salary and credit should be appropriate to the level of risk) if things work out.

Marek Talarczek, CEO of digital accelerator Netguru

Ask for fairness

Photo of Yoko Spirig, founder of stock management platform Ledgy
Yoko Spirig, Founder and CEO, Ledgy

People join startups because they believe in the company – as well as their ability to contribute to and be rewarded for its success. Property rights remain a cloudy issue in Europe, with many candidates still unsure of what they have Period In fact Means.

It is important to understand from the employer exactly how much shares you are allocated and on what terms. Depending on the company’s performance, your equity may make up a large percentage of your total profits. do not worry ask questions To assess the level of risk, as well as the value or potential value of the stock offering.

Some questions to ask about equity are:

  • What is the current company valuation on which my equity is based, and what is the approximate revenue multiplier associated with it? from where is this? How has this changed from a year ago to now?
  • How much of the fully diluted capital will I own?
  • What type of stock scheme am I enrolling in?
  • What are the conditions for this scheme? Will clauses, vesting schedule, strike price and value (both historical and projected) are of particular interest here.
  • If the plan includes options or warrants: What is it like to exercise your options in the company? How often and how does this affect the taxes you may pay on equity and equity payments (now and in the future)?

Equity is part of your total compensation, so it pays to think of it in conjunction with the rest of your other compensation and benefits.

  • How much total compensation do you think is fair for your current role and seniority? Do your research on salary and equity standards if you don’t already know, and keep in mind that companies may be strapped for cash right now, so this may affect how much cash they can offer. Set a cash balance and balance that works for you with this in mind.

Yoko Spirig Founder and CEO of Ledgy, an equity management platform for startups

Do not dismiss companies in their early stages

The later stage no longer means more stability in the startup world. Many companies in the current growth stage are no longer investable from an investor’s point of view. There is a rush to become more capital efficient and to be alive by default (When the firm is expected to make a profit from its existing resources, without any additional investment).

I see the pre-seed and seed stages hot now I would argue that now is the time to start or join a startup (at an early stage). Many funds have moved away from Series B+ growth rounds and are now doing smaller ticket sizes.

There is a lot of great talent on the market as a result of layoffs and Big tech hiring freeze. And things are getting serious. When you join these newly founded companies, you will have fewer “start-up tourists” in the teams you will join. This can be a plus from a career development standpoint, as you will likely be working with teams that are more talented and, as Elon might say, “hardcore”.

Stefan Bader – Co-founder of Cello, a user-driven growth platform for B2B SaaS

Determine if you can learn a lot from this company

The chance of success for startups is low and they tend to get paid less, so make sure you come out of the experience sharper, wiser, and more employable because of the experience. Look for fast-paced environments where you have the opportunity to learn from an amazing line manager and have lots of different things to get stuck with.

To assess this, ask questions in an interview such as: What are the immediate challenges for the company? What does the team I join look like and how do they interact? How well do you interact with other jobs? What are my immediate goals? Is there anything else you think someone with my skill set could contribute to?

Also, do your research on the founders. Find her on LinkedIn and see if she’s been featured in the press or done a podcast. Find out what they value and what it is for. This is not the time to mindlessly work with any organisation. Join a company that makes a difference.

Arusha Brewer, Co-Founder and CEO of Quan Employee Wellness Programme

Compare the compensation offered by the company to market data

Head shot of Virgile Raingeard, co-founder and CEO of compensation measurement platform Figures
Virgil Reinegerd, Co-Founder and CEO, Figures

When setting your salary expectations, look at the market data for the job you’re applying for and see if it matches the salary the company is offering. However, keep in mind that there is less room for negotiation on the candidate side, as there is less of a competitive hiring landscape than in previous years and budgets are tighter.

Startups that are in the pre-seed and seed stage haven’t really slowed down and still have the money to hire people and pay them – but note that the high salaries of the past are now gone.

The good news is that a pre-incorporation or incorporation-stage company that has raised money or is raising money now will likely have done so at a realistic valuation. This means that employees who get stock/stock options from a company that went up recently will have a higher chance of getting better cash in the future as the shares go up.

– Virgile Raingeard, Co-Founder and CEO of Compensation Measurement Tool Shapes

Miriam Partington is the DACH Correspondent at Sifted. They also cover future work and co-authors The Startup Life newsletter from Sifted and tweets from mparts_

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