It’s easy to have a bleak outlook about how early-stage startups will fare this year. Eighty-one percent of them are predicted to fail in 2023 and some experts are warning that companies should brace themselves for an extinction event that will make the 2008 financial crisis look quaint by comparison.
But for the companies that are doing all right, 2023 is presenting an opportunity to get aggressive about hiring and build a more resilient founding team than would have been possible in previous years. And while investors have always played a powerful role in introducing candidates to early-stage startups, platform and talent teams at venture capital funds are particularly well-positioned to help with recruiting this year.
Seed rounds have been insulated from market turmoil
The labor market has shifted over the last year, and fresh talent has opened up for early-stage startups. Venture capital deals in North America hit an all-time high of $330B in 2021. But as funding rounds have fallen, the tech talent hired in the wake of that boon have found themselves in a predicament. Some have been the victims of layoffs as tech companies attempt to course correct. Still others are employed at startups that are growing much slower than anticipated, with valuations at late-stage startups plummeting 40% year over year. Many tech employees are observing that their stock is worth less than when they were hired, and their current employers are unlikely to see a new funding round any time soon.
Angel and seed rounds, by contrast, have been relatively insulated from market turmoil, and pre-money valuations stand 28.6% above where they were in Q1 2022. Part of that is survivorship bias. VCs are favoring companies with strong fundamentals, healthy burn rates, and solid strategies to preserve runway, which means that the companies receiving seed funding could be more likely to see lasting success than in the past.
The most in-demand talent can sense an opportunity
This is where early-stage startups can seize the moment. In-demand candidates who are paying attention to the industry are more likely to take a risk on an early-stage startup now than ever before. Many of these candidates are on a tier that, due to their experience and commensurate salary expectations, would normally be inaccessible to an early-stage startup. But with late-stage funding levels down, early-stage companies are more attractive to the most competitive talent. In-demand candidates know that this is the time to take a risk on a young startup and potentially find themselves on a rocketship a couple of years down the road.
But it’s difficult for candidates to determine whether an early-stage startup is worth the gamble. Many of them are at struggling organizations and finding themselves burnt out and disillusioned. Or, if they’ve already left, they might be trying their hand at self-employment by doing side hustles and consulting projects. In either case, the best candidates are afraid to risk joining a company that isn’t going to succeed. The market isn’t transparent enough to give them the full picture of which companies are viable, and many of them seek an insider’s perspective to find an opportunity that excites them.
VC platform and talent teams are a key differentiator for recruiting top talent
VCs are dependable allies for elite tech talent. The most in-demand candidates often reach out to their contacts at VC funds for insight they can trust, and they are more likely to take a meeting with an early-stage startup on a VC’s recommendation than on a recruiter’s insistence. The best candidates are also likely to tell a VC that they’re looking since they know the recommendations will be well curated. They know that VCs will help them cut through the normal application process and connect directly with a founder or executive.
Increasingly, those connections are handled by platform and talent teams, and every introduction they make gives portfolio companies a competitive advantage. It’s impossible for recruiters to find these premier candidates on their own. In many cases, these candidates aren’t publicly open to opportunities. They aren’t actively applying for jobs. They have made themselves an exclusive talent source for founders who maintain strong relationships with their investors. Platform and talent teams are the critical link between early-stage startups and these powerful job candidates.
VC platform and talent teams can maximize their support by scaling introductions
For VC platform and talent teams that want to help their portfolio companies, the key is to find a way to scale introductions. They can start by creating a centralized job board displaying open positions at all of their portfolio companies, so that candidates that are connecting with VCs can easily see which companies are growing. GetroJobs is a job board solution for VC funds that updates automatically to always display current information.
Platform and talent teams can also use a tool like GetroConnect to help them surface matches between candidates in their fund’s extended network and portfolio companies that are hiring. And finally, VCs can take a proactive approach by talking to founders about what they have planned six months in the future. It’s better to facilitate introductions early so that neither side needs to make an immediate decision.
2023 has the potential to be a game changing year for early-stage startups, and the ones that leverage their investors’ networks will have a significant advantage. Platform and talent teams can rise to the occasion by providing hands-on talent support and scaling the number of introductions they provide to hiring managers. This year in particular, VCs are positioned to play a critical role in their portfolio companies’ success.
Want to learn more about how Getro can help you connect founders with candidates? Schedule a demo today!