By: Shaye DiPasquale
Many of us who started our careers working for traditional media corporations have little understanding how the companies we worked for were financially supported beyond perhaps a quarterly stockholders’ call that we half-listened to. And for recent grads, journalism and comms professors have yet to add VC Funding 101 to the required courses list. But it should be.
These days venture capital (VC) organizations play a huge role in how startups operate. A lot of today’s media darlings — Bustle, BuzzFeed, Vox, and Refinery29 — were born thanks to VC funding. They are also huge players in the startup tech world, where it’s important to note content jobs are (gasp!) booming.
Yet, you may find yourself looking at those job descriptions and wonder, Can I hack it at a startup? Will I look stupid if I don’t understand what they’re talking about?
Before we spiral down that rabbit hole, let’s break down what VC-funded actually means.
VC Funding, A Primer
The journey of a startup usually begins when a person with an idea invests their own money into bringing a product or service to life. The founder and their team will then make business proposals to potential investors, highlighting how the investor could turn a considerable profit by putting money, or capital, behind their new business. It’s important to note startup companies are often asking for investors to financially back their company without a proven record of success.
That element of risk is what makes startups so attractive to venture capital firms, or “groups of investors who gain income from wealthy people who want to grow their wealth.” A venture capitalist’s favorite acronym is ROI, return on investment. VC firms will provide capital — i.e., a big fat check — to select startups that have the potential to breakout, allowing investors to make back their money and, hopefully, then some.
Before You Apply
VC funding is extremely popular for startups so chances are good that if you’re applying to work at one, it’s backed by VC. How do you know for sure? Start by looking them up on Crunchbase, a platform for finding business information about private and public companies, recommends Cindy Medina Carson, a career coach, recruitment expert, and founder of WAGER. Then, follow these four steps:
- Assess Your Risk
“Figure out your risk tolerance,” says Medina Carson. “You have to stop and think, is this worth the risk? What would happen in six months if I take this job, lose this job and then I’m out. Am I okay with that ride?”
To determine where the startup falls on your risk tolerance scale, start by asking the recruiter or hiring manager about the company’s vision and what its goals are for the next six months, year, or even 5 years.
You’ll also want to determine how well the startup is financially supported. Start by asking what stage of funding it’s in. Generally speaking working for a startup at the Seed or Series A stage is more risky than if it has reached Series B or C funding. (This article does a nice job explaining the funding stages.) This information should be available on Crunchbase, too.
The harsh reality of many VC-funded startups is their hiring and firing decisions will be strongly driven by finances, says Medina Carson. If the company isn’t producing solid financial results within a given timeframe, pressure from their VC firm can increase, funding may be cut, and/or jobs might be lost. Consider venture-backed sites like Mic, Mashable and Vice Media—at one point, each of these companies was looked at as digital media’s latest and greatest, yet they all suffered hard losses due to competition, funding withdrawal, and waves of layoffs.
Even after accepting the job, you should stay on top of what’s going on with your company so you’re not blindsided later, notes Medina Carson. Get in the habit of monitoring what is being said about the company in the press and continue to ask for transparency from leadership.
- Know What The Job Is (And What It Isn’t)
Many people view working at a startup as a great resume-building opportunity, a chance to make an impact on a young company and gain lots of valuable hands-on experience. While this is all true, you also need to assess if that’s what you need at this point in your career, says Medina Carson.
Startups can be like charcuterie boards, offering you the chance to try a little bit of everything.
If you get hired as a copywriter, you may find yourself moonlighting in the design, business development and account management departments. That’s just the nature of small-staffed companies — you could be called upon to help with a task or project that you’d normally consider to fall outside of your wheelhouse.
For entry or associate level professionals, this can be really exciting. Medina Carson suggests looking at your role at a start-up like you would an internship: How can you make the most out of your time with the company? You’ll likely work longer hours for less pay, be asked to juggle many responsibilities at once and be expected to handle rapid-fire changes to assignments.
For folks further along in their career, particularly those looking for roles at the director or above level, the decision may be more complex. Medina Carson recommends starting by assessing who will be your direct manager and understanding their relationship to the company and its goals. “Their standing within the company is going to be very linked to the bottom line of the VC and to the VC’s goal,” she notes.
Don’t be afraid to ask questions, says Chandra Turner, founder of Talent Fairy, a boutique recruiting agency that connects editorial talent with brands for content marketing and brand storytelling roles. Ask, What defines success for you in your role? What will define success in my role supporting you and the company?
“Make sure the leadership or executive team actually buys into whatever function and role you are being brought in for,” says Cristina Tudino, a content strategy consultant for brands and startups in the lifestyle space who has worked for startups including PureWow, Birchbox, Ollie, and Freshly.
“During the interview, ask Does leadership support the hiring of this role and believe in the value of this function?, especially if it is a role in content,” she says. “It’s important to verify that there is buy-in from above.”
- Understand Your Compensation Package
Even if you are ready to take a calculated risk, you still need to make sure you are being paid what you deserve. “The compensation packages at startups can look different than those at traditional media companies,” says Turner. Instead of a base salary and maybe a bonus or two, you could be looking at equity and stock options and a bunch of non-traditional perks like ski lift tickets, remote office setups, and free flowing beer on tap (truth).
It may all sound awesome but make sure to ask about the details. “You’ll want to know how quickly you’ll receive any bonus or any equity structure that is not salary,” says Medina Carson. “You’ll also want to know if it’s tied to performance; your own personal performance or even the company’s performance. You could be hitting it out of the park and doing everything you’re supposed to do, but if the company is taking on different spaces or trying to cut costs, that may affect you even though you’ve done your part.”
Startups that do not have a lot of cash up front may make up the difference by providing a lower base salary and equity in the company. But proceed with caution. That equity could be worth nothing — or everything — depending on how well the company does. “A big takeaway for me was not to expect too much from the equity side of the equation,” says Tudino. “It’s often sold as a big part of your package but the reality is that you may never benefit from it. So focus on your base salary and any bonus and other benefits such as healthcare.”
“If you are told that you won’t be seeing your full compensation for a significant length of time down the road, that should be a big red flag, says Medina Carson.
Also, be sure to weigh the “non-traditional” perks you are offered. Yes, all-inclusive happy hours and ping-pong tables in the office might sound fun, but at what cost? If the company experiences growing pains or falls on hard times, these perks will probably be the first things to go.
“As someone on the ‘older’ side at startups, there can be a lot of aspects of the culture that are sold as ‘perks’ but have no real value in your life,” says Tudino who is in her late 30s. “For example, in terms of benefits at this stage, I’d rather have a full paid parental leave policy than lots of snacks in the communal kitchen.”
- Do a Gut Check
Once you’ve collected all of the information about the startup’s viability, the ins and outs of your role and the details of the compensation package, do your own assessment: Would I use this product? Would I recommend this service? If I personally wouldn’t, can I see how it would help and benefit others? Do I believe the business has potential for continued growth and success?
Medina Carson’s advice: Visualize how you will feel if a few years from now the company has experienced little business growth and you’re making the same salary. Would you regret your decision to join the company? If the smallest part of you is thinking “yes,” don’t take the job, she says. “People feel hugged and loved when they are offered jobs.” she says. It’s super flattering. “But you have to make sure that it works for you and your family and whatever else is on your plate.”
More so than any other company, working at a startup is believing in the business and its mission. You may be willing to sacrifice a higher salary and dedicate more hours to the job because you value being part of something you genuinely believe in. “That can be huge,” says Turner. “People are hungry to work for companies that they believe in and to do work they feel like they can make the world a better place.”
Tudino recalls experiencing this feeling while working as the Director of Content at the human-grade dog food startup Ollie. Her words are still on the brand’s boxes and website. “There can be a real sense of building something, contributing to a company you believe in, especially if it’s mission-driven.” she says. “That can be very satisfying.”
Shaye DiPasquale is the executive assistant and lead writer at Talent Fairy. She is also a publicist and freelance writer, social media manager, and content creator. Her writing has appeared on Her Campus, HelloFlo, Her Culture, Substream Magazine, The Owl and more. She is also the founder of createHER Collective, a community supporting students, post-grads + pros as they curate creative and multi-hyphenate careers & lives. Check out more of her work at shayedipasquale.com.