Recently an entrepreneurial leader told me he was interested in joining a funded early stage startup in a COO or CEO role. After quizzing him for a bit about what he meant as a funded early stage startup (raised a Series A round from institutional investors), I offered up a few thoughts on evaluating a startup to join:
- Has the startup achieved product-market fit? Just because there’s institutional money it doesn’t mean that the dogs eat the dog food.
- Has the startup built a repeatable customer acquisition machine? Customers might love the product but if customers can’t be found in a predictability, cost-effective manner, there’s still a serious amount of risk.
- What’s the board arrangement like? Is it a functional board? Are the entrepreneurs in control? Joining a startup with a dysfunctional board makes for a poor experience.
- How critical is culture to the entrepreneurs? Culture is important at all stages and sets the tone for how the company operates.
- How much cash is in the bank? How much runway does the startup have? Just because the startup raised money doesn’t mean it’s in a strong financial position.
- What’s the current division of roles and responsibilities of the management team? Some people have broad titles like COO but really specialize in one or two functional areas like product management or marketing.
- What’s the three year plan look like? While things change all the time it’s still important to look out over several years and have a fluid game plan.
- What are the top three priorities right now? What does the simplified one page strategic plan look like? Aligning everyone in the company is critical.
So, with a few ideas and words of encouragement, I told him joining an early stage startup would be an awesome experience and that he’d learn a tremendous amount.
What else? What are some other thoughts on evaluating an early stage startup to join?