By their very nature, startups are unique in that they have fewer resources than big businesses, meaning their approach to growth and expansion is often leaner because of these funding constraints. This means that the things you should consider when applying for a job in a startup are different to other businesses. Here are some tips on what to keep an eye out for when looking to work in a startup.

1. Equity

Is equity part of the employment offer, and if so, how much and in what form?

The majority of startups are limited financially and not yet profitable. This means they’re unable to match the salaries and bonuses big businesses offer and are then expected to compensate by offering equity in the business. This also incentivizes employees to work towards growing the business.

Remember that many startups never become profitable and that this promise of equity does not then mean that you will become rich like the artist Facebook paid in shares to paint the walls of their first office space. There are many obstacles along the way that can dilute the value of your equity. If a prospective employer promises you equity, ask yourself these questions:

  1. Will I get the equity now, or will it vest in the future?
  2. Am I being offered enough based on my experience and skill set?
  3. Will I be working here for a long time?
  4. How valuable could my equity become if I stick around?

Answer these questions early in the piece, because negotiating more once you’ve already accepted the offer will not be easy. The bottom line is that as the business grows, so too will the value of your equity. If the business isn’t growing, negotiating more equity will be useless, as it still won’t be worth anything.

Consider the financial risk you are exposing yourself to by joining the business. Are you confident enough in the model and team to voluntarily accept a lower salary than you could otherwise get from a business in the same industry? If so, think of yourself as an investor and not merely an employee. Your share of equity should be a reflection of the value you bring to the business.

2. Salary

How much are they offering to pay you? As startups are financially constrained and not yet profitable, it’s hard to offer potential employees competitive salaries. Despite this, you should always try to negotiate a fair salary from the moment you engage in negotiations with the employer. Try to negotiate a salary that you could see yourself still being happy receiving in 3-5 years time.

3. Non-compete Clause

It is very important that you check your employment contracts with a fine-toothed comb to see whether your prospective employer has included non-compete or non-solicitation clauses. These clauses are aimed at restricting your future employment or business options after your time with the startup ends. You should negotiate to have these clauses omitted to the furthest extent possible. 

4. Startup Culture

Have you already considered the fast-paced, high-pressure environment that startups usually foster? What about the long hours and flexible roles? This lack of structure or lack of growth can be very frustrating and unfamiliar.

As such, it is only worth joining a startup and making these concessions if you see potential in the business, and the business opportunity itself offers the chance to grow and develop new and relevant skills. Think long term and think about your career progression.

5. The Team

When deciding whether or not to work somewhere, it is natural to consider the individual members of the team. What skills does each bring to the table? Have they worked together before? Have they had startup success previously? What is their track record like, proven or unproven? This risk assessment is necessary but should not be the decisive factor. Also, consider your first impression of the team when you meet them. Do they gel well? Is there synergy between them? Is their skill set broad or narrow?

6. Job Titles

While some people couldn’t care less about what their colleagues refer to them as or what they write in their email signature, when joining a startup, a job title sometimes increases in value as a business grows. It becomes harder to negotiate your preferred job title later in the piece, so go in knowing what role you want to fill and what title you want to own.

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If you have any questions about what it’s like to work at a startup, tag us on Twitter @legalvision_au and let us know.

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