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I have a job offer from a startup company that has received $250M in funding The most recent round for $125M was completed in February of this year. The investor names are really well known large companies (including T. Rowe Price, Fidelity Investments, Morgan Stanley).
So it looks promising, and the offer is fantastic. However, before I commit and leave my stable, but mundane, current job I would like to dig into the company's performance a bit more. However, I'm not sure how. Any ideas?
I would ask to see the company's financial statements, and any projections they've used for their funding requests. If they will allow you to have a copy, take them to a CPA and ask his/her opinion. If not, ask to have them explained by their CFO or other financial person. Are they making money? Assuming they are not making money, how much cash do they have to fund the current losses? In other words, when does their cash run out? When do they expect to break even and starting turning a profit? What has to happen in order for the company to turn profitable? Is it dependent on some drug approval? A patent? I don't know how much information they will provide, but it's worth asking for.
I have a job offer from a startup company that has received $250M in funding The most recent round for $125M was completed in February of this year. The investor names are really well known large companies (including T. Rowe Price, Fidelity Investments, Morgan Stanley).
So it looks promising, and the offer is fantastic. However, before I commit and leave my stable, but mundane, current job I would like to dig into the company's performance a bit more. However, I'm not sure how. Any ideas?
It's hard because they are probably losing money. Have to go by sales, the strength of the product, margins, strength/competance of management team. Alot of the things listed here you won't be able to get info on. But just have to get as much as you can and realize you are taking a big risk.
Your smart for wanting to do more research and understanding that your leaving a relatively stable gig for a less stable one. Realise however that startups do lose money oftentimes, the future is uncertain, amd there is less stability. Most peoppe dont work for startups for the great pay, oftentimes its not great but often you get stock in the company or get in at the ground level so if it does take off you win big. Risk equals reward
After the latest funding round, the company's valuation was $800M. At least that's what the press release said. I really don't know how valid VC valuations are however. They have some impressive customers, but again, I'm not sure of any financial details.
Had a close friend and a family member involved in big start-ups. My friend was on his 5th start up attempt and this time was the winner, he became a multi-millionaire overnight in stock. After some time, his company got taken over and the stock dropped to less than 10% of what it was, he had to sell the big house at a loss and start over.
Our family member got recruited with big bucks for another start up with big name investors and corporations. After about a year it got swallowed up by the competition and they were all let go.
So make sure you have enough savings to support your family just in case the venture comes to a quick end and you need to look for something else.
After the latest funding round, the company's valuation was $800M. At least that's what the press release said. I really don't know how valid VC valuations are however. They have some impressive customers, but again, I'm not sure of any financial details.
From what you describe, my first reaction is this is NOT a start-up. To me a start-up is a much smaller entity that is on the verge of getting that first $5M -- or is in its first year after that $5M hoping to meet milestones so they can get a 2nd round of financing (maybe $25M)
When it is a startup, I'd spend the bulk of my time on the market opportunity. Most startups talk about the hockey-stick growth curve and many angel investors joke about the $0 Billion market. The second thing I look at is the management team & its experience both in larger companies and doing startups, and how much of their own personal money they have invested. Then, I'd look at everything else such as patent protection (I'd read the patents), competition, etc -- the classic 4 Ps or 7 Ps of the marketing mix.
From what you describe, this has gone far beyond startup. So in this case, I think I'd expand my research to look at the way the new company is spending its money. Is it looking for innovative & cheap ways of doing things? Does it scrimp to save cash? Is management quite frugal on current spending? Or, does it seem to spend money as if it were already a big & profitable company?
To me, if it is operating as if it were already a big & profitable company when in reality it is still getting going, I'd have doubts.
After the latest funding round, the company's valuation was $800M. At least that's what the press release said. I really don't know how valid VC valuations are however.
Depending on the VC, they tend to do some very good analysis of the opportunity and the management. Even so, most VC-funded companies fail, of course.
The post-money valuation of $800M is mostly important at this stage is it sets the price per share of the restricted stock & stock options you will receive as part of your compensation package.
I have a job offer from a startup company that has received $250M in funding The most recent round for $125M was completed in February of this year. The investor names are really well known large companies (including T. Rowe Price, Fidelity Investments, Morgan Stanley).
So it looks promising, and the offer is fantastic. However, before I commit and leave my stable, but mundane, current job I would like to dig into the company's performance a bit more. However, I'm not sure how. Any ideas?
Sounds like they are burning money... or investing it wisely for future success.
As others have alluded, there is no way to know if they will be a success unless you have access to the financials, which you don't. Even then, you never know when the plug might be pulled or a court ruling might send you to the unemployment line... that is why it is called a "start up". They are all risky and very few make it.
But the amount of money they receive means very little if the founders are spending it the wrong way.
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