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Unlocking Success: How can Venture Capital firms harness people strategy to maximise returns?

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​Venture Capital (VC) is one of the fastest growing industries in the USA. Referring to a form of funding used by investors to provide to startup companies and small businesses with long-term growth potential, it’s come to prominence over the last few years and is now worth $240.9 billion globally. Recent advances in technology make it more accessible and cheaper to start new businesses, which in turn has increased funding opportunities. As the cybersecurity industry expands, investors are scrambling to find unicorns, so the sector is only set to grow.

We often think of VCs in relation to financial injections, but most VC firms also support their portfolios with technical and managerial expertise, with input on people strategy being a particular area of interest. There’s been a definite shift to VCs offering team-building support to portfolios over the last few years, with the realisation that the right founding team can accelerate company growth and thus maximise returns on investment. Many of the big names, including Sequoia Capital, Forgepoint Capital and WestCap are hiring Talent Director’s in-house to support startups with expert-intelligence and advice on their talent build-out. Yet many more are partnering with recruitment firms to outsource the hiring process, leveraging the network and expertise of firms operating in the cyber space. So, what’s the draw for the VCs and investees to access this level of support?

The power of people strategy

It’s common knowledge that the right team is central to success. Yet not many people know that it is often a deciding factor in VC funding choices at seed level. In research by The Harvard Business Review, the perceived ability of a founding team to carry a business was cited by 95% of VC firms as an important factor in the decision to pursue deals. In contrast, just 74% thought the business model was the top priority. It’s often referred to as the “horse and jockey” analogy: the founding team being the jockey and the business strategy the horse. In this case, management are arguably more important than the business model, as that can be tweaked whereas people will make or break the business’ success.

Brian Jacobs, a co-founder of Emergence Capital, summarised it well when he said “I have never seen a venture success for which one person deserves all the credit. The winners always seem to be the founders who can build a kick-ass team.”

The role of the recruitment partner

A lot of work takes place post initial investment, and that’s where the specialist recruiter really comes in, providing value through advisory services to boost portfolio growth. It’s unlikely you will find a founder or founding team with all the relevant skills needed to launch a successful company. Whether it be sales, marketing or technical expertise, they’re going to need the best people around them to build the business. The recruiter works with the VC and portfolio company founders to advise and direct people strategy to best suit the business direction.

This could include anything from guiding on compensation and benefit models, establishing a hiring plan and sourcing top talent across the industry. Really, the right recruitment partner with a proper understanding of the market could consult on everything from hiring and talent development to organisational culture, drawing on their experience in the sector and established industry know-how. With a large network of top sales and technical talent, and the ability to source C-Suite and Executive level hires without public advertising, the recruiter can build a high-performing team much faster than the VC or founders could hope to achieve without support.

Leveraging people strategy

At Trident Search we understand that at every stage of your business growth you will require different types of people. Take your sales team for example, at Seed level you might want to fill it with innovative, maverick thinkers who will take risks to make a killer enterprise sales pitch, whereas at Series B you’ll need a few more strategic planners who can help you to manage sustainable growth.

The recruitment partner embeds within the portfolio company to really understand the vision of the founders and the team building needs they have at each funding round before building a roadmap to guide the hiring process. We refer to this as the SOURCE model:

On top of this planning and advisory stage, the recruitment partner adds value through:

  • Establishing which skills/positions are needed in the team

  • Sourcing the right candidates, either from their own network or via search

  • Advising on job descriptions and salary brackets

  • Advertising open opportunities

  • Capturing crucial candidate intel to match the best people for open roles

  • Managing the interview and feedback processes

  • Improving candidate experience through regular comms

Ultimately, the key is to build your business proposition around people as a fundamental pillar and to nail the ins and outs of talent strategy early on to save yourself some major headaches down the line. With ample experience of the startup landscape, VCs and their recruitment partners add immeasurable value by advising on the right approach and placing the best people at each stage of the company’s growth.

Getting the relationship right

In the fast-paced world of venture capital, where ideas are flexible and pivots are common, the importance of people should never be underestimated. While products can be adjusted and strategies can be refined, the founder's vision and talent are the driving force behind every successful venture. In fact, the strategic input on people strategy and the cultivation of a winning team the recruitment partner provides can significantly accelerate the return on investment for venture capital firms, the key driver for initial investment in the first place. For investees, this kind of support means they have a go-to specialist who can assess hiring plans, evaluate growth plans and advise on the type of team they need to succeed. It’s a win-win scenario!

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