Initial Public Offerings & Start-Up Opportunities; Careful For What You Wish For

There is much excitement and anticipation in the start-up and IPO era. Billions of dollars have been made by starting on the ground floor of these explosive opportunities. This can be amazing and exciting at the same time, exhausting and stressful. Here are some facts that also need to be considered when choosing this path for your career.

The exciting vision of the next Google or Facebook needs to be tempered in reality. In 2019 -2020 there were roughly 770,000 start up companies in the US. Only 24% of these companies performed well enough to generate a profit. This is the lowest level since the Dotcom implosion of 2000.

The promise of working extra hours, and in some cases at low wages, with no benefits simply have not paid off. In 2019-2020 only 26 of the 770,000 companies went public. Even the companies that did go public with promises of riches from stock options of restricted stock options did not have strong returns. It seems we only hear about the amazing exceptions like Facebook, Google, Lyft and others. The reality is that the odds are not in your favor.

There are important questions to ask when considering these types of opportunities.

  • How is the company funded? Is this a venture funded company or simply a single investor who could choose to pull the plug with their investment at any time.
  • Is the company profitable or if not when will it become profitable.
  • Who is their competition (companies like Amazon in the retail space or Microsoft in the tech space could easily destroy a young start-ups plans).
  • Do they have strong strategic partnerships with highly successful and well funded companies?

If you are not asking these questions you are taking risks. The concept of a start-up in general is that a small team will be asked to do the job of larger organizations. This can lead to work related stress, anxiety and health issues. There is nothing glamorous about working yourself to bad health and unhappiness. Do your homework before you jump.

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