10 things I’d look for in a winning startup

Over the last decade and a bit, I’ve worked for three London based, VC backed and fast-growth startups. Now as a Fractional Sales lead, I’m working with even more early stage companies. Over the years, I’ve picked up some thoughts on what I think makes a successful SaaS company.

By success, in this context, I am referring to a company that is:

most likely to make a decent exit, within a decent timeframe

- so that you as an employee can cash out on the equity you have been given!

Liquidity for employees is still unfortunately a bit on the rare side in Europe, but as someone who’s done it twice, I can testify to it being completely possible. The odds will be in your favour if you choose smartly (timing the market well) and you of course also need to stay long enough to vest all or majority of your shares (which is typically four years).

This article is my personal take on what I would look for, if I were to join an early stage company again. Let’s dive right in!

The founders

I would look into who the founders are, what they did before and their skillset. Founders who ran or even exited a company before will have the benefit of connections, easier access to capital and the experience needed to hire and scale this venture. So if they built a business before, even one that failed, I’d take that as a positive sign.

My second go-to would be first-time founders who had a previous long tenure in a company within the same space. They know the industry, would have come across relevant customer pains and would be well connected which helps get things off the ground.

I’d also see it as a positive thing if there are multiple founders (3-4 ideally) with different skill sets and they are all still involved with the business.

What did the founders do prior to starting this business?
What roles / skills do they have?
Are all founders still actively involved in the business? (and if not, why?)

2. The management team

I’ve firsthand seen how the management team can make or break a company, so I’d definitely spend some time looking into the C-level and maybe also VP’s. If the company is at a very early stage there wouldn’t be a management team outside of the founders in place yet. But if the company is getting to a decent size, there should be some experienced hires in place already.

The reason that the management team is so essential is not just because of what they do, but more importantly because they role model behaviors that will have a trickle effect across the whole company. And those behaviors need to be outstanding, for the company to be outstanding. So, if you meet with any senior leaders during your interview process, it’s worth asking yourself if you feel that they are the type of people that will help drive a great company culture.

Who are the leaders outside of the founding team?
What is their background? Did they have long tenures in previous roles? Did they take companies through the type of growth journey this company is in for?

3. The market

The performance of the company itself is of course important, and I’ll get back to that. But even more importantly, it’s hard to be successful in a market that is not ripe, or that is over-ripe.

As an example, I was working with employee engagement software at the exact time when many companies were getting rid of their manual annual surveys, which made things a lot easier! I’ve also worked with other types of software at a time when the market was not really ripe, and that certainly makes things a lot harder.

If I’d join a new startup today in 2024, anything in climate, AI or software that saves companies money would be high up on my list.

Certainly if you are in a sales role the market timing is key (your commission depends on it). But if you’re an engineer, it’s more fun to build in a rapidly changing space. If you’re in CS, you will struggle less to renew your customers. And so on.

But how do you know what a hot market is? You can look both at the company you are interviewing for, but also research competitors and the space in general. For example, if what the company offers is almost identical to a company that did a successful exit 5 years ago, the ship may have sailed already. If lots of companies are popping up right now doing the same thing that’s probably a great sign (“just” pick the best one).

How many competitors can you find over a 5 min Google scan, how are those companies doing in comparison?

Have there been any acquisitions in this space? IPO’s?

4. Funding and investors

It’s likely you’ll be interviewing with a company quite soon after a recent funding round, as hiring may have been on hold for a bit just before, and then restart again. I remember the absolute hiring frenzy that took place after a series A at a company I worked for and suddenly not recognising anyone by the coffee machine in the mornings!

(As a side note: Salary levels tend to go up with each round and equity may go down, so do your research on what is competitive based on the latest stage!)

Well funded companies may be more exciting as lots of new projects and initiatives will be kicking off in order to execute on spending and growth plans.

What kind of funding has the company received? When was the last round? How does it compare to competitors and the space?
Who are the investors, and depending on the stage of the company, did existing investors participate again?
Is money going into your department and for what type of initiatives?

5. Your line manager

There’s the old saying of “you don’t leave a job, you leave your boss” and having a manager you get along with is certainly important if you’re planning to stay for four years or more. They will hopefully also, just like senior leaders, role model good behaviours.

But for the purpose of picking a winning startup, I’d personally rank this quite low on my wish-list. Because in my experience, across multiple companies and types of roles, your line manager may change as often as every 6 months. So I wouldn’t be too bothered with who my manager is. A bad line manager won’t be long-lived in a startup environment (they may be though if the company is later stage) and a good one might get promoted, meaning you’d get a new manager anyway.

But there is one big exception to this, and that is if this is one of your very first roles, in which case it is absolutely key that you have a manager you can learn from. It will help you grow the right skills, and land your next role at an even better startup.

What’s their background? How long tenure did they have in previous companies?
How does this team score on engagement? What was your manager's rating in the last performance cycle?
What kind of management style do they have, is it one that aligns with how you like to be managed?

6. Performance

This one is pretty straightforward - make sure you are setting yourself up for success by looking into the performance of the company and your peers!

If you are going into a sales role, or any other quota or target carrying role, look into how attainable that target is by finding out how the existing team is doing. If you’re going into a support role, maybe look into stats around support tickets and customer satisfaction scores, and so on.

What proportion of sales reps hit their quota last quarter / year?

Have there been any recent rounds of redundancies? Any other big news about the company?

7. Employee option pool

Pretty much all fast growing SaaS companies set aside option pools for employees, and if you’re hoping to cash out on your equity, this one is obviously a prerequisite to all the other points. If you’re doing all this research to pick the best company, and you are planning to stay for the long run to vest all your options you should definitely ask some questions around equity, and try to negotiate it.

If you’ve already received an offer, do ask for a current pound / dollar estimate of the value. (don’t settle for an X amount of shares or X%). Then make your mind up on what you think that might be worth in the future depending on the trajectory of the company.

What is the size of the option pool?
What is my offered equity worth based on the most recent valuation?
Is there a chance of increasing my equity stake later on, how?
Does the company offer any kind of regular liquidity events or would I need to wait for an exit?
Does the company use some type of software that gives me visibility into my equity?

8. The recruitment process

So I’m going to keep this one short. But it’s important.

In my experience, the way the company manages the recruitment process says a lot about the culture. If you’re constantly waiting to hear back or feel interviews are poorly prepared or managed that’s certainly not a good sign.

If instead it’s a structured process, you’re always kept in the loop and you receive good feedback throughout all stages, that’s promising.

What is your gut telling you about the company, based on this recruitment process?

9. Product

There’s only so much you can learn about the product while interviewing for a company but if you’re looking for a winner, it’s absolutely key so definitely important to look into. And I am not referring to high level things like what the product does on the tin and how the demo looks, but on a deep level there are two things I’d really be keen to understand.

Is the product actually solving customers' pain points?
Is the foundation solid and the direction clearly managed?

I’ve seen companies that didn’t have a solid foundation for the tech before attempting to scale, so a few years in they literally need to start over building from scratch and migrating all the customers over. That’s not a good place to be.

I’ve also worked somewhere where the tech was solid from the very start, meaning it worked for the long term as the company scaled, and that company eventually achieved a great exit.

Having a look at review sites like G2 might be useful to hear from actual customers. I personally would also look into the size of the engineering team, and their tenure in the company. Is there a solid “architect” of the product who’s been there since the early days, ideally one of the founders or a founding senior engineer? I find that the most successful SaaS businesses have a co-founder or two who are obsessed with the inner workings of the product.

10. Company culture

We all value different things and what I think is a great company culture, may not be what you are looking for. But overall, having a look at Glassdoor and LinkedIn may be a good idea to make sure you are not going somewhere where the majority of people don’t thrive. Because if people don’t thrive, the company will never succeed regardless of market timing or product.

You could also do a quick search of the company name and scan the “news” section. Especially if you are going to a bigger tech company you may learn about lawsuits or disputes with former employees (you’d be surprised how common these are). And then don’t be scared to ask about it as there may be perfectly good explanations.

How do you track the engagement of your staff? What came up as improvement areas last time?
How do you measure performance? What happens if an employee doesn’t perform?

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I hope this article has been helpful if you are an employee looking to join a SaaS company, or a founder looking to attract top talent!

My name is Stina and I help early stage SaaS businesses sell more. Book me in for a chat here.