I attended Launch Silicon Valley on Tuesday and watched some great companies launch, but what struck me the most was a comment made by Seth Sternberg of meebo. He said in his keynote speech that with all the capital he has raised, $37.5 million to date from top-tier VCs (Sequoia, DFJ, Jafco, Time Warner and KTB), hiring is his #1 problem.
I suppose there are many entrepreneurs that think that as soon as they raise capital, bringing on team members will become a lot easier. One of the reasons you take a firm’s capital is to have them help you find talent.
What I find interesting is that with each capital raise a different personality becomes attracted to your company. When in the seed stage, you are usually tapping your personal network for co-founders. Co-founders are more willing to work for 100% equity, which is a very large risk and, hence, attracts that high risk taking personality.
Once you’ve raised a seed round, be it self-funded, angel, family & friends, you immediately attract a different personality. Someone that is willing to take less risk, which translates into a mix of cash and equity. With each subsequent round, the candidates risk level diminishes.
Since risk profile of the people that are attracted to your company changes, your talent acquisition strategy must adapt as well. Unlike at an established company, where an HR Manager can call on a candidate that submitted a resume a year ago, startups must constantly be on the hunt for the candidate that fits the company’s current stage. I believe one of the reasons hiring is Seth’s #1 problem, as it probably is with most startups, is that you are constantly looking for a moving target.
I’d be interested to hear what your experiences have been pre and post a capital raise, and how the personality profile has changed throughout your company’s evolution.