I'll give you the 4 factors that one of my mentors used in evaluating whether a startup company was going to make it successfully to an IPO or buyout or some other kind of equity success. These are controversial, and there are exceptions, but I think he's right on in most cases:

1. The company must have a differentiating technology that provides a significant barrier to entry. You don't want to go to work for a company that has a neat little gizmo but one that google or microsoft could reinvent in 3 weeks if they put a couple of good developers on it. Ideally, they should have something legitimately different in underlying technology and something that nobody has been able to figure out, not just the first mover to solve a not-so-complex problem.

2. There must be an identifiable market that is ready to embrace the differentiating technology. While a small market of technologists will buy something to see how it works, the company will not succeed until it has identified a broad market (it need not be a huge market) that is prepared to invest in the technology to solve business problems. The best way to determine this is not to simply ask if they have customers (because someone will buy ANYTHING), you want to ask to see 3 or 4 "quantified customer success stories", where they have been able to show how the technology resulted in a business benefit to the customer.

3. (Now we're getting into the controversial part), the original technical founders of the company need to have stepped aside from executive management to focus exclusively on product development and innovation. The simple fact is that the skills needed to raise money, run a sales team, work with investors, and manage a rapidly growing company are very different from the skills required to solve the hard technical problem that was the original reason the company was formed.

4. (Related to #3), the company must have a sales-oriented culture. Once the shiny new gizmo has been created, what determines the company's success at this point is getting people to buy it. Investors and the market pay a premium for growth, and growth is defined as year-to-year increase in sales. That's just reality. If you want to make a big score at a startup company (and that's why most people work at startups, because it's too much work otherwise), then the focus needs to be sales.

Paul Graham has quite a lot to say about startup companies on his web site, which I think is fantastic.

I've worked at a few startups, and when all 4 of the above were in place, they succeeded. Along the way, I learned the difference between a startup and a "restart", which is a company that has failed, but is on life support. Large investment companies will often keep a company barely alive rather than close the company and take a writeoff on the balance sheet. Avoid these companies of the walking dead...

Happy to share whatever else you'd like to know...

Jim