Employees digging deep for info before taking up jobs in startups

Startups looking to hire – especially at the senior level – are now facing a barrage of such tough questions from prospective candidates, particularly those from non-internet sectors.

Candidates at senior and CXO levels are now probing recruiters and founders about how startups are spending money, their runway, the next tranche of funding, etc. amid a slowing funding climate and a spate of layoffs across the sector, industry insiders said.

“Some of these questions came our way in the past as well…but now people are probing much deeper,” said Ashwin Damera, CEO of edtech unicorn Eruditus.

There is now far more in-depth questioning from CXO and CXO-1-level candidates on aspects such as money in the bank, long-term prospects, and even the value of stock options they would get, he said.

The increased due diligence by prospective employees comes even as certain startups are withdrawing some offers rolled out already, a recruiter said.

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While ups and downs are normal in the startup ecosystem, candidates are being more wary given the current climate where hikes being offered for switching jobs come down and buybacks are expected to become infrequent as companies try to conserve cash, experts said.

“Candidates are being more cautious now,” said Ashish Sanganeria, senior partner at executive search firm Transearch.

Questions vary. Junior and mid-level candidates are asking about previous layoffs, whether increments have been given for the last two years, etc. to establish the startup’s financial strength.

At the senior level, there are questions about down rounds, whether ESOP buybacks will be postponed and understanding about cash flows, when break-even is expected, etc.

“We are seeing this across levels in the last three-four months,” said Chaitanya Ramalingegowda, cofounder of home and sleep solutions brand Wakefit.

“We’ve had recent instances where people joined us and then told us that they’d done reference checks of our investors from friends in portfolio companies before accepting the offer,” he said.

In some sectors such as edtech and health tech, which saw disproportionate growth during the pandemic but have slowed down since, the scrutiny is more.

“Candidates are trying to make sure if certain models will work,” said Anuj Roy, managing partner of executive search firm Fidius Advisory. “People from conventional firms are doing this more.”

Sanam Rawal, partner at Passion Connect, a strategic services unit incubated by Blume Ventures to help its 145 portfolio companies in areas such as HR advisory services, said that while junior and middle-levels are more worried about layoffs, CXOs want to understand in detail about the future strategy, whether they will be able to achieve what the startup plans to achieve etc.

“The trust factor needs to be converted. If you are able to explain in the right manner and convince a senior hire about what you want to do next, how you can grow, and about the equity stock scenario, then people are comfortable enough to join,” Rawal said.