Venture Capital Firms get the Value of Recruiting
You might not readily associate venture capitalists with recruiting, but one recent anecdote on the Wall Street Journal blog tells us that Venture Capital (VC) firms are realizing the significance of recruiting talent quickly and cleanly.
For those who might not be experts in the world of finance, lots of startups that don’t have enough financing rely on VC firms to provide the cash needed to lift off their ambitious project.
VC’s work perfectly for startups because banks will not lend money to ideas no matter how bright they may be, especially when the idea is in the hands of an empty-handed wannabe. VC firms pool cash from investment companies, university endowment funds, large corporations, pension funds and wealthy individuals to invest in high-risk ideas that promise profitability in the long run. These pooled funds are also known as private equity.
On the other side of the spectrum, since these firms are taking the risks banks won’t, they expect greater profit margins than banks do (a rough estimate is about 25 percent or more in return). Therefore, before you go knocking on VC doors, you must be absolutely certain of the success of your product or service.
Coming back to our interesting anecdote, CEO Game Closure Michael Carter started recruiting young talent from local universities and sounded excited about having an abundance of prospective interns. He realized that the new generation of employees or interns would bring more to the table than any experienced head simply because the youth of today are so much more immersed in technology than their predecessors.
Historically, VC’s were known to appoint only high-level executives in the firms they invest in, for obvious reasons. But the rules of engagement are now evolving to include mid-level management as well as lower-level staff. This is good news for available talent of all ages, especially prime targets like fresh grads.
Many venture capitals believe it’s a move that has been already overdue for some time now. VC’s must add value to startups in every possible way and there’s no better way than to influence the recruitment within the companies they invest in. No one argues that recruiting the right people to the right positions is the make or break factor for startups. Many startups have invested in teams of in-house recruiters that have produced results for the companies.
These stories add further weight to the fact that recruitment is as critical for startups as it is for multinationals, if not more important. Whether your company is a few days old or has years of experience under the belt, the truth is that having the brightest minds on your side will only help you establish your brand and actually turn it into a profit-making business.
Without recruiting the best brains on the market, your chances of success are as slim as a bamboo shoot.