Joining a Startup? Here’s What You Need to Know

The thought of joining a startup can be enticing. For some, it’s the autonomy and freedom to experiment with new ideas that lures them in. For others, it’s the more collaborative, casual environment and opportunity to work alongside like-minded peers passionate about entrepreneurship.

But making the choice isn’t always easy. Is a startup the right fit, or would you be better-suited for a corporate environment? If you’re contemplating a career change or mulling over a new position, here are five factors to consider before joining a startup.

What You Need to Know Before Joining a Startup

1. Early Employees Create the Culture

When you join an established organization, the culture is more immediately apparent. Values have been defined and refined over the years and, if executed successfully, permeate the company, informing how employees interact, solve problems, and collaborate.

At a startup, the early employees are the culture. The founders’ personalities and values influence daily operations. With every new hire and decision made, the culture slowly starts to form, and whenever a founder chooses to pursue or ignore an initiative, they’re sending a signal to employees about what they think will help the organization achieve its mission.

Before deciding to join a startup, make sure your vision and values align with the founders’. If not, it’s likely the company culture won’t be a fit. Some startup employees are expected to work long hours with less pay, making work-life balance scarce. To counter this, you need to know the work will be meaningful and engaging.

Related: 11 Questions to Ask Before Joining a Startup

2. Your Financial Future Is Uncertain

If your paycheck came late, would you be prepared? The reality is, depending on the startup’s stage, you might not get paid on a regular schedule.

There are various methods founders can use to secure startup funding, each of which can impact employees’ ability to receive regular paychecks. It’s important to familiarize yourself with these methods before joining a startup so you’re aware of how financially secure you’ll be before joining.

According to the online course Launching Tech Ventures, financing methods include:

• Bootstrapping: Founders using their own capital to finance their venture
• Venture capital (VC): VC firms offering financial support in return for equity
• Friends and family: Founders relying on financial support from friends and family members
• Angel investors: Wealthy investors supporting a startup’s objectives at their own expense
• Incubators and accelerators: Firms offering guidance and support for early-stage startups

Each method offers its own risks to employees and the overall venture. It’s also important to ask:

• Is there a plan to fundraise?
• How much capital do the founders need?
• Who are the investors they’re working with?

You should have the answers to these questions before accepting a position, so you can better gauge the risk.

If you have savings in place, the opportunity might be worth it since a successful venture can result in significant long-term gains, especially if the company offers you equity. It’s important, though, to determine what you can and can’t live without, as your financial future is more uncertain.

3. The Benefits May Vary

Salary is only one of the benefits to consider. You might be offered equity, or a stake in the company, to augment your pay. If you are, carefully read the terms and conditions. It’s important to know the total number of shares outstanding—not just what you’re being offered—so you can get a true picture of how much of the venture you’d own.

Equity is granted in different forms, including

• Stock options: Allows you to buy shares at a predetermined price
• Restricted stock units: Typically subject to a vesting schedule that determines when you’re eligible to earn equity and often requires you to stay at the company for a certain number of years

If you’re working for a startup you’re confident will achieve long-term success, then equity can be an enticing perk. If the startup’s exit strategy isn’t defined or the future of your industry is unclear, negotiate instead for health insurance—another benefit some startups might forego until they’re profitable.

It’s important to know your non-negotiables before joining a startup. Is there a certain salary threshold you need to hit, or can any gaps be offset by equity? The benefits vary by startup, so understanding your priorities will help you determine whether you’re making the right next step.

Related: 5 Key Pieces of Advice for Aspiring Entrepreneurs

4. Adaptability Is Key

If you prefer process and structure, a startup environment might not be for you. Startups have limited resources, which means employees typically need to tackle work outside the scope of their job description.

For those who thrive in ambiguity and can easily adapt to change, this is a plus. Joining a startup offers you the opportunity to gain new skills and explore different functional areas you might otherwise not have exposure to working at a larger firm.

5. This Will Be a Risk

By joining a startup, you’re ultimately taking a risk. Roughly 90 percent of startups fail—10 percent within a year. Although daunting, there are several potential rewards. Not only will you gain new skills, but you’ll learn about entrepreneurship and develop a deeper understanding of what it takes to build a company from the ground up.

It’s important to acknowledge the risk and do your research. Look into the founders’ background and track record. Is this their first startup? Do they have the strategic vision needed to take the company to the next level?

From there, analyze the industry. Are there opportunities to disrupt the status quo, and is this startup positioned to make a significant impact? If so, joining could be the right choice for your career.

How to Join a Startup

If joining a startup sounds exciting, it’s crucial to know how to join a company that fits your professional goals.

Your professional network is a critical tool to help find and secure a startup job. Your network can be made up of friends, family, former classmates, colleagues and teachers, and professionals you meet in online learning communities. For instance, the HBS Online Community is a global network of professionals interested in expanding their business knowledge. By contacting peers in industries of interest or messaging entrepreneurs with inspiring success stories, you can establish yourself in a highly niche space.

Remember, while joining a startup might be a risk, it’s a chance that could pay off. You never know—you could end up working for the next Airbnb or Netflix.

Are you interested in joining a startup, but want to better understand the ins and outs of entrepreneurship? Explore our online courses Entrepreneurship Essentials and Launching Tech Ventures, and learn how to navigate the complex startup world. Not sure which course is right for you? Download our free flowchart.

This post was updated on September 26, 2023. It was originally published on June 4, 2019.