
The worst time to join a startup is right after it gets initial VC financing - prakash
http://www.cdixon.org/?p=363
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railsjedi
Depends on if you want equity or not. If you are consultant, the absolute best
time to join a startup is after they get funding. It means low risk of bounced
checks. Several very bad mistakes consulting for prefunded startups leads me
to this conclusion.

~~~
flipper
Exactly. The VCs would expect the startup to spend the capital on growing the
business quickly, and if that means hiring consultants and paying them a top
rate then so be it. In fact, the startup would get in trouble with their
financiers if they didn't do it.

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netsp
I am certainly no expert, but this doesn't seem surprising for three reasons.

\- Significant investment means significant external validation for the
company's chances of success. It also theoretically raises its chances of
success. it isn't some idea that nobody would fund.

\- Before investment the company is comprised of some work that has been done
& some ideas. After investment, the company is more work and money. It's
bigger.

\- They can afford to pay salaries.

Can someone explain why this post doesn't just mean penny stocks are better
the blue chips?

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Frocer
Exactly, because of those 3 points above the new employee also takes on
significantly less risk in comparison to joining pre-Series A. It's very
logical and I don't really get what the OP was trying to explain.

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adw
That the risk is systematically undervalued post-Series A; funding isn't
magic. If you join the same company the day before a term sheet turns up, you
do a lot better financially, and it's the same idea, team, market risk. If
they're OK then the odds of getting funded are decent; if they're not, being
funded won't save you...

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netsp
If you buy stock the day before it goes up...

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adw
But we're not talking about stock: we're talking about whether to take a job
or not. When you invest your time in a small company, you're making the same
decisions as you were the day before Series A; does the product work? Can the
team I'm joining deliver? Is there a market?

VCs have more experience, so, sure, their judgement is worth considering, but
I'd want to trust my own intuition too...

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akeefer
Sure, but don't discount the fact that having the VC money is a non-trivial
component of the company's success in many cases. So it's not just "is this a
good team/business" but also "is this a good team/business and do they have
enough runway to reach profitability?" The VC money doesn't change the first
half of that equation, but it changes the second half.

In other words: would you join an awesome team that's about to run out of
cash? How about joining an awesome team with an 18 month runway? The answers
to those are going to be very different.

~~~
adw
Sure, that's absolutely true; am there, doing that, hoping for the T-shirt.

All these things get set up as dichotomies when they aren't. All I'm really
meaning is that "oh, they've got funded" feels like a pretty limiting way of
deciding whether you think a startup will be be a winner or not, compared to
meeting with your potential colleagues and kicking the tyres yourself - and
the premium you get for guessing right if you throw in with the pre-Series-A
team is actually pretty big.

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ulf
"This is pretty much the opposite of Wall Street’s compensation schemes. To
me, as a principle, that means it’s probably a good idea.."

priceless

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gfodor
Uh, one word: paycheck.

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megamark16
I just joined a startup that recently received funding (although not in the 2M
range). If they hadn't received some venture capital I don't know if I would
have been up for the risk, I've got a family to take care of :-) Obviously
there's still risk involved, but feeling pretty confident that my paychecks
are going to clear is good.

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zackattack
I read previously (on here) that pre-money engineers tend to get shafted.
Would somebody in the know please opine?

