Don’t underestimate how risky joining a startup is
Saying this as someone who did 2 full years in a strong M&A group. I joined a series A startup without doing enough diligence and I am really not having a great time here.
Everyone these days just talks about startups this and startups that but don’t forget that these companies have no guarantee of making it anywhere and change a lot overnight, very different than your formulaic finance or large corporate jobs.
I’m actively trying to leave mine now for various reasons but didn’t really foresee this - naive of me
Have you had difficulty recruiting? What are you planning on exiting to broadly?
Following
Based on the most helpful WSO content, your experience aligns with many cautionary tales shared about joining startups. Startups are inherently risky, and several factors contribute to this:
High Failure Rate: Only 1 in 10 startups succeed, and even those with VC backing often have limited runway (8-12 months of cash). This creates significant job insecurity.
Equity Misconceptions: Many employees join startups with the hope of equity payouts, but VC-backed startups are notoriously stingy with equity. Even top-level employees often hold less than 10%, and equity stakes rarely increase meaningfully over time.
Unpredictable Environment: Startups can change direction overnight, making them vastly different from the structured nature of finance or corporate roles. This unpredictability can lead to disorganization, long hours, and unfulfilled promises of promotions or growth.
Limited Financial Upside: Raises, bonuses, and promotions are rare due to tight budgets. The belief that equity appreciation compensates for this is often not reflective of reality.
Reputation Risk: If the startup fails or underperforms, it can negatively impact your professional narrative, especially if you're looking to return to more traditional roles.
Your situation highlights the importance of thorough due diligence before joining a startup. Evaluating the company's financial health, leadership, and growth potential is crucial. If you're actively looking to leave, leveraging your M&A background and network could help you transition back into a more stable role.
Sources: Why You Should Reject that Start-Up Job, Why You Should Reject that Start-Up Job, From PE >> Startup >> Back to PE, 1st Year Analysts Quitting?
why do you not like it?
Interested since in similar boat (at M&A group but want to quit). Would you recommend staying for the full 2 years in banking and aim for later stage startups?
Yes I’d go later stage unless you’re very good at handling risk and uncertainty
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