How to Evaluate a Startup’s Stability (Before You Join)
- Jay Green
- Aug 22
- 4 min read
Why This Guide Exists
Not all startups are created equal. Some are on a breakout path. Others are quietly burning through capital. If you are considering joining a startup, especially early stage, this guide will help you assess how stable, and promising, the opportunity really is.
1) Funding Stage and Financial Health
Funding Stage Breakdown
Note: these are rough estimates, every startup is different.
Stage | ARR | Team Size | Product Status | Learning Potential | Risk Level |
Pre-Seed | $0–$100k | 1–5 | Idea to MVP | Very High | Extremely High |
Seed | $100k–$1M | 5–20 | Live MVP | High | Very High |
Series A | $1M–$3M | 20–80 | Early PMF | Moderate toHigh | High |
Series B | $3M–$10M | 75–200+ | Mature PMF, scale | Moderate | Moderate |
Series C | $10M–$50M | 150–500+ | Expansion underway | Moderate | Lower |
Series D+ | $50M+ | 300–1,000+ | Global or IPO-ready | Low to Moderate | Low |
Some notes:
Aggressive hiring post Series B is common. With PMF and a solid GTM motion, they expand AEs, SDRs, CS, marketing, product, and RevOps.
Series C rounds are usually large, greater than $50M, and fund headcount expansion across functions.
SaaS is labor intensive. You need sales, customer success, onboarding, marketing, engineering, and it adds up fast.
Enterprise focused SaaS companies scale teams faster than PLG or SMB startups.
How to Check a Startup’s Financial Health
Use public tools:
Crunchbase: basic funding history, key hires, investors
PitchBook: premium investor focused research
TechCrunch: news on raises, layoffs, product launches
What to look for:
Total funding raised and last round date
Runway, how long can they operate before needing more funding
Backers, Tier 1 VCs, like a16z, Sequoia, etc., signal credibility
Smart Interview Questions
Ask these confidently to get a clear picture of their financial health:
How much runway do you currently have based on your burn rate and revenue?
How do you anticipate that changing over the next 6 to 12 months?
What is the current plan to reach profitability, if you are not already there?
What are your year over year revenue growth or key customer KPIs?
Financial Red Flags
Vague answers like we are well funded, without details
No clear monetization path or pricing strategy
Still pre revenue at Series A or beyond
We will figure it out instead of a defined plan
Layoffs plus leadership changes plus no clarity equals bad combo
Green Flags
Recent raise with clear purpose and timeline
Honest, confident answers to financial questions
Logical plan for growth and sustainability
12 to 24 month runway and active hiring
2) Leadership Team Quality
Strong leadership is the best insurance policy at an early stage company.
What to Look For
Experience, have they scaled or sold a company before
Vision, can they clearly articulate where the company is going
Functional understanding, do they get sales, marketing, or product, depending on your role
Questions to Ask
How did the founding team come together
What is the biggest strategic challenge you are focused on right now
Red Flags
Founders with no relevant background
Defensive or evasive when asked about the business model
High turnover at the executive level
3) Revenue Model and Financial Traction
Is the business working, look under the hood.
What to Look For
Is revenue live, or launching soon
Is it recurring, SaaS, or transactional, project based, services
Are they dependent on one to two major customers
Good Signs
Clear pricing on the website
Growing customer base or sales pipeline
Investors betting on revenue traction, not just vision
Red Flags
We are still figuring out monetization after two plus years
Frequent pivots or one off deals to stay alive
No consistency in revenue motion
4) Customer Base and Market Validation
You want real traction, not vaporware.
What to Look For
Do real customers pay real money
Are there logos, case studies, or reviews
Is the market large enough to support growth
How to Research
Browse their website for named customers
Search LinkedIn to see customer connections
Check G2, Capterra, Reddit for product feedback
Green Flags
Testimonials with outcomes, for example saved us 30 percent
Named customers and public use cases
Clear ICP, ideal customer profile
Red Flags
Trusted by top brands with no logos
Constantly pivoting product or messaging
Vague buyer or market focus
5) Team Growth, Retention and Culture
Team trends are lagging indicators of startup health.
What to Look For
Are they growing sustainably or churning staff
Are roles being filled logically, sales after product, CS after sales
Is the leadership team stable
How to Check
Search company on LinkedIn, click Insights
Review Glassdoor for culture, turnover, and leadership
Ask, what happened to the person previously in this role
Good Signs
Steady, strategic headcount growth
Positive reviews referencing support and learning
Internal promotions and long tenured team members
Red Flags
Sudden hiring freezes or mass exits
Reviews citing burnout, disorganization, or politics
High turnover in the role you are interviewing for
Final Takeaway
Joining a startup is not just a job, it is an investment of your time, energy, and reputation. Ask the same questions a smart VC would.
Pro Tip Interview Question:
“If we’re successful over the next 12 months, what will the company and this team look like?” That answer reveals more than any pitch deck.
About ClosedWon Talent
ClosedWon Talent is a specialized sales recruiting firm that helps growth-focused companies hire top GTM talent. We partner with founders, revenue leaders, and investors to build high-performing sales teams across SaaS and beyond.
What sets us apart is the ClosedWon Method: a proven recruiting framework built on speed, precision, and transparency. We combine deep industry expertise with a curated candidate network to deliver shortlists of qualified, motivated sales professionals...fast. Our team doesn’t just fill roles, we act as embedded partners who understand how to assess selling style, territory experience, and growth potential based on each client’s specific needs.
