What are Zombie startups? 5 things employees should know before joining — EXPLAINED

Startup India: India has accepted the startup culture with open arms. Today there are imponderable startups in various sectors of India. While startups like Nykaa, Zomato, Swiggy, etc have boomed, not all startups are successful.

These startups that raised a ton of money over the boom cycle but aren’t producing nearly enough revenue to justify the valuation are called ‘Zombie startups’ and unfortunately, Zombie startups have become a common scenario today. 

Working for a startup could be a great financial opportunity, but it is necessary to avoid zombie startups as they may not give out the outcomes that are expected. 

Here are some things to keep in mind before joining a startup-

1. Look into who has funded the startup 
Before joining a startup one should do a background check and see who has funded the startup. If one notices that the money raised comes from investors with no track record and are only looking for any shiny deal or a public ICO but that no product has been launched, then that’s a red flag.

2. Don’t fall for shiny startups 
All that glitters is not gold, don’t judge a startup just because it is making news and has won awards, always look into the numbers that the company is making and judge.

3. Look how the employees are incentivised
Before joining a startup make sure to ask around how the company is incentivising the employees. Many startups do not pay their employees timely or do not appreciate the efforts of the employees, which can be disappointing and frustrating in the long run. 

4. Transparency is non-negotiable 
Before joining the startup if one feels that the company is not sharing something or is secretive then that can be a warning sign. Secretive culture could turn out to be very costly for an obvious reason: If one is misled, one may end up trapped and working for a company whose fate is sealed. Again, that is an expensive mistake to make. Speaking to a couple of employees when in talks with the startup is a great way to assess how transparent the founders are.

5. Is it a side business for the investors/promoters?
There's a rising trend of businessmen investing into or launching startups as side businesses. A lot of times their interests change, or they do not find the enterprise lucrative enough and the startup changes its course completely or winds up. Do ascertain how serious the founders are about their startup enterprise.