How to evaluate series A start up offer when compared to big tech base pay and RSU?
I am in need of guidance in understanding an offer from a series A funded startup and also what to look out for in terms of red flags. Some of things I noticed during interview and in linkedin is that the 2 out of the 3 founders are recent bachelors grads and engineering consists of only 2 engineers and 1 scientist/researcher (including the founder) . There are total of 20-26 employees. They did show a demoable platform with claims to multiple customers in the airline, fulfillment centers and manufacturing centers. They are in series A with 10 M funded from corporate venture capital. My worry is that the founders don’t have the experience and the number of engineers are very less.
![Mid-Level Software Engineer [SDE 2] at Amazon company logo](/_next/image/?url=https%3A%2F%2Ffirebasestorage.googleapis.com%2Fv0%2Fb%2Ftech-career-growth.appspot.com%2Fo%2Fcompany_logos%252Famazon_logo.jpg%3Falt%3Dmedia%26token%3Dff5f2302-08be-43bc-b7b1-d381ba508d99&w=48&q=75){kind=logo}
Discussion
(4 comments)- 22 months agoEntry-Level Software Engineer at Seed Startup
Your concerns are valid. There is only so much you can find out about a startup during the interview process. And it's unlikely they'll tell you about any of the real problems, so you have a ton of guess work to do. If they do tell you about real struggles, that's a pretty good green flag.
Founders tend to say whatever they need to in order to get early employees to join. Sadly, you don't have Glassdoor at this stage to do some due diligence.
Common Red Flags
Shiny Demo
Never, ever believe any demo that they give you (especially if it's an AI demo). It's most likely fake, unless they let you use the tool yourself.
Equity-Heavy offer
Early stage startup valuations are rather fuzzy. And if they have stacked SAFE contracts, your equity can get diluted really fast. Don't let startup founders give you this "but your equity is worth $5 million right now according to my personal valuation...", that's just a lie.
High Turnover
Look up both current and former employees on Linkedin. If the turnover is really high, chances are you're looking at some unstable personalities steering the ship.
Nobody Leveling Up at the Startup
Ask how people get promoted or significant increases in comp. If nobody has gotten increased responsibilities/comp in the past 6 months/year, that means nobody is given the opportunity to grow.
Low-No revenue/High Churn
Money talks. If a startup isn't getting traction, it's not getting traction.
TLDR;
Sadly, I can't name all the red flags. There are many unscrupulous founders who will bullshit you to the moon and back. But by asking hard questions during the interview process, hopefully you'll be able to filter out most of the grifters.
- 12 months agoApplied Scientist L5 [OP]Amazon
Thank you, this is quite insightful. They did show a video demo of the product (it’s an analytics platform). However, I did not get to meet the engineering team who built this demoable platform. Maybe it’s something I need to ask for in my next call with the founder.
I cannot say for churn rate since I did find a couple of former engineers but seemed like they may have been contractors from third party.
I can also ask on the leveling up, the expected milestones that they are targeting and on that achievement of milestone, what would be the comp increase of equity increase.
A follow up question I had, for a 45 M valuation and 20 employees, any idea on what the range of the expected equity percentage is in the valley?
- 02 months agoEntry-Level Software Engineer at Seed Startup
There should be resources online on the expected equity percentage. That being said, I'd give the "equity" at least a 70% haircut when you tack it onto base as "TC".
Talking to the engineers would definitely help.
Oh yeah, final thing. If it's a Series A startup, ask what the milestones are to hit Series B and where the team is at in regards to that. If the startup is at $0.1 million ARR and it needs to hit $20 million, that's just an uphill battle.
- 02 months agoTech Lead/Manager at Meta, Pinterest, Kosei
The most important thing is whether the startup has product-market fit (PMF). Everything is downstream of this. If the company has PMF and growing rapidly:
- Your equity will become very valuable
- You will be give more opportunities, scope, and career growth
- You'll work with other smart people who are attracted to a high-growth environment.
If the company has clear PMF, I wouldn't worry about the age of the founders. Ask them if they have PMF and how they measure it.
Elliot mentions this in terms of what metrics the company needs to hit: "If it's a Series A startup, ask what the milestones are to hit Series B and where the team is at in regards to that." This is very good advice.
James Hawkins, CEO of Posthog, talks about the questions he wishes more candidates would ask here: The Really Important Job Interview Questions Engineers Should Ask (But Don't)
