Startups should expect more scrutiny from VCs on their hiring plans
As the job market tightens, startups will face more questions from potential investors about their hiring plans.
While the overall U.S. job market is improving, the picture is not so rosy for startup companies. The number of job openings at startups has declined for three straight quarters, according to the most recent report from the National Venture Capital Association and Dow Jones VentureSource.
And as the job market tightens, startups will face more questions from potential investors about their hiring plans. That was one of the key takeaways from a recent panel of venture capitalists at the NVCA’s annual meeting in San Francisco.
“One of the first questions we’re going to ask is, ‘What is your hiring plan for the next 12 to 18 months?'” said Anand Sanwal, co-founder and CEO of research firm CB Insights. “If startups can’t answer that question, they’re going to have a hard time winning over VCs.”
The panelists said that in addition to having a solid plan for hiring, startups will also need to show that they are being strategic about their hires. That means looking for employees who can help the company grow in new ways, rather than just filling open positions.
“You have to be thinking about where you want the company to be in two years, not just where it is today,” said Jabe Blumenthal, a partner at Scale Venture Partners. “That’s how you make sure you’re hiring the right people.”
The panelists also encouraged startups to think outside the traditional job market when recruiting employees. In addition to looking for talented people who may not have a lot of experience in the tech industry, startups should also consider employees from other industries who have the skills and background that can be transferable to a new company.
“There are a lot of people out there with the skills you need, you just have to find them,” said Mark Suster, a partner at Upfront Ventures. “And you shouldn’t be afraid to hire people who may not have worked in startups before. They can bring a lot to the table.”
In the wake of the #MeToo movement, startups should expect more scrutiny from venture capitalists (VCs) on their hiring plans. VCs are under pressure to ensure that the companies they invest in have strong policies and procedures in place to prevent and address sexual harassment.
As part of this process, VCs are likely to ask startups more questions about their hiring plans and practices. They may want to see evidence that the startup has considered the issue of sexual harassment and has a plan to address it.
Here are some questions VCs may ask:
– What are your policies and procedures for addressing sexual harassment?
– Have you conducted any training on sexual harassment prevention?
– How do you plan to screen job candidates to ensure they would be a good fit for your company culture?
– What are your policies on relationships between employees and supervisors?
– How do you plan to handle complaints of sexual harassment?
Startups should be prepared to answer these questions and should expect more scrutiny from VCs on their hiring plans in the future.