At Neon River, one of our specialisms is recruiting for venture capital and private equity backed companies. But what makes these sorts of headhunting assignments unique?
Pitching VC and PE backed companies to candidates
One obvious distinguishing feature of VC and PE backed companies is that they are often less well known to candidates. How a headhunter therefore pitches the company proposition to candidates is especially important. A skilled headhunter should be able to summarise and distill the proposition so it can be explained simply and clearly in a way that a normal person, who isn’t an expert in the business or sector, can understand.
Many entrepreneurial companies have products that are innovative – what trends do they tie into that the average person would understand and buy into? A VC backed mobile app company that makes it easier to exercise at home is easy to buy into when you consider the impact of Coronavirus. A PE backed software company whose software reduces manual tasks, eliminating costs and time needed to administrate data is another very accessible proposition when explained correctly.
As well as needing to buy into the product vision of the company, candidates want to feel re-assured about the financial status and potential of the business. Is it profitable? If not, can we point to strong revenue growth? Is the company well funded from their venture capital or private equity investors?
Having “an interesting proposition” is one of the most important things to candidates when considering a new job opportunity. This should be an area of strength for a VC or PE backed business with a disruptive proposition. Another key theme for most candidates is influence – the chance to make a difference, both within the company and the wider world. Smaller, high growth companies should be able to offer broad roles, and because they are inherently less hierarchical than later stage companies they should be able to offer highly influential positions to potential candidates.
Working with founders
Founders are often at the helm of VC and PE backed companies, and working well with founders is extremely important for headhunting firms who do this kind of work. Because founders are entrepreneurs, they often haven’t had the steady progression of a corporate career, but rather are often thrust into a CEO role without having had a lot of prior, C-level experience. Founders therefore might never have hired a CFO, or CMO or VP Global Sales before. That’s not to say they won’t have strong opinions on the right candidate profile though – these might be wise preferences, or somewhat naive – either because they don’t focus on what is truly important, or because their preferences don’t reflect the reality of candidate skills in the market. You might want someone who is an expert in both sales and marketing, but the reality is that 99% of candidates specialize in one or the other. You might be attracted to the idea of hiring a super senior CFO, but that candidate might not be hands-on enough for the role given the early stage nature of the company, or they might be too expensive or simply not want to work for a company at this stage.
In this context, the headhunter might well have more experience of a particular kind of hire than the client, and therefore needs to play a key advisory role in helping the client to choose the right placement, rather than just “selling candidates” to the clients, as some recruiters are wont to do. How can you use your expertise to de-risk the hire and ensure the client makes the right choice?
When you work with entrepreneurial companies, the fees are often lower compared to working with more mature corporates. Earlier stage companies often don’t make a profit, and furthermore many entrepreneurs are more careful in spending money compared to someone who is spending a large corporation’s capital. Many founders haven’t worked with retained executive search firms before, and are used to working with contingent recruiters who don’t insist on exclusivity or ask for money up front. Retained executive search is undoubtedly a much higher quality service compared to contingent recruitment, but it can also seem financially risky (e.g. paying money up front) if you’ve never worked with a retained search firm before. Indeed many founders work with retained search firms once other avenues (in-house recruitment, contingent recruiters) have failed. One key challenge for executive search firms in this context is to demonstrate the value they can add and why retained search is a good choice for senior-level positions.
Recruitment projects for VC and PE backed companies can be some of the most rewarding to work on. They are rarely dull, and the combination of radical, innovative company propositions and the interesting founders, make them often fascinating projects for recruiters. Although the fees can be lower, and sometimes expectations can be unrealistic, they are some of the most fun projects to work on for any executive search professional.