Recruit Top Talent Before and While Raising Capital

Hiring is an ongoing endeavor. You know you’re doing it right (at least partially) when you’re always doing it, even if you’re not actively trying to fill roles. One of the CEO’s main jobs should be recruiting top talent. Unfortunately, most CEOs don’t put enough systematic effort into recruiting and it falls to the wayside. Then when panic strikes and you desperately need 3 top developers “yesterday”, you’re screwed.

One of the key times in a startup’s life is when it’s raising capital. Raising capital is a means to an end, not an end in and of itself. It sure feels like winning (and raising capital is hard), but the day after the money hits your bank account it’s back to business. And things get a whole lot crazier and more intense.

Money does make some things easier – like hiring. You can finally afford people, which is nice, versus trying to convince everyone to join you for pocket change and some equity. Most startups and CEOs start the hiring process after raising money, because they’ve universally told investors that the money they’re raising is going in-part to bolstering the team. And almost every investor pitch will include a list of key hires by position/title. Rarely though, do startups and CEOs actually know who they want to hire once they have the funds.

And that’s a mistake and lost opportunity.

While in the midst of raising capital, you should also be recruiting top talent. That’s precisely the right time to start attracting people to the company. You’re building momentum for funding, in an effort to attract investors. You’re going after press attention, growing your network, bringing on advisors & mentors, testing viral campaigns, etc. That stuff works on candidates too. They want to see momentum and traction. They want to see that you’re bolstering the team with great mentors. They want to feel like they’re going to jump on a rocket ship and have a huge impact doing it.

They also need to get paid. So they’re not likely to jump on board pre-funding (although you always have to convince someone at that stage to believe in you!) but that’s exactly the time that you should be wooing them. Give yourself enough time to recruit the best people possible - they’re not going to jump instantly and easily - and build relationships over time. In the same way that you have to go through numerous meetings with investors, find those that you connect with, get aligned on vision and strategy, etc. — do the same things with candidates.

Running the two processes of fundraising and recruiting simultaneously is incredibly challenging. Both are time consuming, frustrating and risky. You’ll often hear people tell you that when you’re fundraising it’s almost impossible to do anything else with the business (continue building / iterating on product, acquiring customers, marketing, etc.) And that’s surprisingly true. First-timers don’t believe it until they’re neck deep in fundraising, two months in and shocked that the rest of their startup has made little progress. But raising money and recruiting are very similar processes, which makes it easier to context shift between the two. And if you do manage to get people convinced to jump pre-funding (and they’re waiting for it to close), you can highlight those targeted recruits to investors. You don’t just have empty buckets with titles and job descriptions that you need to fill, you actually have people eager and ready to go.

That means when the money hits your bank account you’re going to be able to move that much faster and focus on the next stage of your startup, instead of sputtering out of the gates.

February 22, 2012 Posted in Startups by

  • http://twitter.com/jbondc Jonathan

    Ben, another great post. You’re a valuable resource to the startup community!

  • http://www.instigatorblog.com/ Benjamin Yoskovitz

    Thanks Jonathan – much appreciated.

  • http://twitter.com/1000000Pursuit MillionDollarPursuit

    I enjoyed the article but raising capital can prove to be a very difficult task at times. There’s always underlying factors that affect your success when looking for that start up capital. How do you suggest recruiting a powerhouse team when you don’t even know when you’ll find capital to get your business going?

  • http://letter.ly/startupdailydigest Jim Shook

    Great post. Signaling is such an important part of the fundraising and hiring process. Possible hires love to see investor interest and investors love to see talent interest.

  • http://www.instigatorblog.com/ Benjamin Yoskovitz

    It’s very difficult. Ultimately you try and convince people to join regardless of funds. You’ll often here people say, “If you can’t convince 1 person to join you (for free), maybe there’s something wrong with the idea?”

    If you don’t have the money, and you don’t know when you’ll close fundraising (maybe you haven’t even started) then you have to be able to convince people to take a shot for equity alone, and the promise of getting paid in the future.

  • http://twitter.com/rocSpeaks return on change

    Great insight on the process! People often forget the value of parallel paths!

  • http://freegiftcardshq.net/ Charles

     Good post Ben. I am building websites now, but a few years back I teamed up with a friend and we tried to do a start up, which actually didn”t pan out. The capitol and raising it was the tough part. Great points here

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  • Kahramankarayel

    An incredible way of gaining money, easy and a technological system.
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  • http://alexgblog.com/ AlexG

    Great post. Talents means everything

  • http://twitter.com/hongdquan Hong Quan

    This is an excellent post Ben. I tell Founders this every chance I get, but it sounds self-serving since I’m a recruiter. I think it’s actually harder to get the very best talent (the 1%) than it is to raise. Talent is the new capital in the startup ecosystem.

  • http://www.instigatorblog.com/ Benjamin Yoskovitz

    Hong – I don’t know how you’d really measure which is harder, but it’s not unreasonable to say that recruiting the 1% is genuinely harder than raising capital.  It’s hard. We’ve certainly seen it. Even hiring the top 10% or 20% is hard…and time and time again, CEOs and founders don’t put the time or energy into it.

    Appreciate you stopping by and commenting!

  • http://www.instigatorblog.com/ Benjamin Yoskovitz

    Agreed. It works both ways. Potential hires feel the momentum of potential funding and vice versa. 

  • http://twitter.com/mrchrisallen Chris Allen

    Great post Ben! It was really nice to read this and see that I’ve been doing exactly what you’ve said while raising this A round. 

  • http://www.instigatorblog.com/ Benjamin Yoskovitz

    Chris – thanks for stopping by and commenting. Glad to see you’re ahead of the game, recruiting while raising the Series A for your company. Good luck with both of those!

  • Pingback: Always Be Recruiting? » Process for the Enterprise

Ben Yoskovitz
I'm VP Product at GoInstant (acq. by Salesforce).

I'm also a Founding Partner at Year One Labs, an early stage accelerator in Montreal. Previously I founded Standout Jobs (and sold it).

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