Venture Capitalists and Recruiting

When Money’s at Play, Smart Investors Pay Keen Attention to the Talent in Whom They Invest

The similarities between Silicon Valley and the HBO show by that name are often spot-on, something that might surprise viewers who are unfamiliar with the region’s startup culture. The talent at the helm of such organizations can be just as eccentric as Richard Hendrix and as combustible as Erlich Bachman, which makes it a challenge to find the right fit of early-stage employees who will excel under such “leadership.” For this reason, venture capitalist firms who’ve invested in these companies can take a significant role in the talent growth process by bringing in the right recruiting firm or in-house HR expert to help streamline a company’s personnel needs as it prepares to ramp up hiring.

Growth and Hiring Go Hand in Hand

Outside of the original founders, a company’s first 10 hires are crucial to a company’s future success. Venture firms know this as well as anyone. Without the right people in place, a startup will remain a startup for perpetuity and never develop into a large, successful and enduring business. That’s why, even in its infancy, a company needs to be dedicated to attracting and retaining talent, and putting cohesive hiring practices in place. Otherwise, disjointed hiring practices will consume far more time, energy, and resources than they should and can be largely ineffective.

A Venture Firm Necessity: Strong Recruiting Capabilities

For this reason, it’s often wise to partner with a good recruiting firm once a startup is ready to build its core leadership team. Investors can play a pivotal role in driving this when it’s time to seek critical talent. Today’s high-potential startups—the next Amazon, Google, or Facebook—are still out there in healthy numbers, but they aren’t scaling in terms of growth the way they were two decades ago in the 90s. When personnel needs become a blind spot, it hampers tech startups in ways from which they may not recover.

For startups, that responsibility is often outsourced, and investors with extended networks may be able to connect their portfolio firms with top-notch recruiters. If not, savvy founders may take on the role of facilitating such a relationship. But if they don’t, these firms may languish in pre-growth mode far beyond any reasonable timeframe, churning through recruiting cycles and suffering through ongoing turnover.

But recruiting isn’t always just about growth in terms of new roles and positions. Sometimes, existing ones need upgrades. VCs and board members sometimes play an active and occasionally cutthroat role in executive searches, seeking to replace founders when they deem it necessary. While these moves often don’t translate into future success, it’s estimated that between 20 to 40 percent of founders don’t remain in their original role. When investors make the call to switch, they need to consider the culture of the company and the dramatic impact a new top executive will have on the startup’s team. Every executive is fair game for removal. It happened to Bob Metcalf , CEO and founder of 3Com, co-inventor of Ethernet. And more recently, Moz founder and former CEO Rand Fishkin exited unceremoniously.

If VC firms don’t already have the exact person in mind (ideally with an offer in hand), they need to enlist a shrewd recruiting firm that understands not only what types of candidates would be ideal, but also the best way to engage and land them. The next Amazon or Google is out there somewhere. It just needs the right people at the helm whose special talents unleash its potential to let it thrive.

A Track Record of Success

Long story short, make sure you find the right recruiting partner. HireLabs has extensive experience working with the VC community to place the right candidates in your portfolio companies. As a Seattle-based recruiting strategy firm with clients nationwide, our team successfully partners with early- and growth-stage startups to find and connect them with the specialized talent they need to build out their teams. We know tech and we know startups. And we know the unique professional desires of today’s tech stars that bridge the gap between interest and commitment.

Tom ThompsonComment