In a new venture, the team isn’t just an asset — it is the lifeblood of your company. Building the right team can make all the difference between a successful venture and one that fails. In this article, we will explore why starting a venture with the right team is paramount, what is the configuration of the right starting team, and how to attract and recruit the right talent for the team.
The Importance of Starting a Venture with the Right Team
Building a team that aligns with the venture’s vision is the foundation for success. When a team understands and shares a venture’s values, goals, and aspirations, they can drive the business toward its vision and create a positive impact.
A study was conducted in UC Berkeley to predict new venture success based on different factors observed in the pre-startup phase. The study looked into 134 new ventures and their performance and found that ventures with strong human capital resources and organizational capital, i.e. having the right team, have a disproportionate chance to be successful.
A well-balanced team can bring a diverse set of skills, perspectives, and problem-solving approaches to the table, creating an environment that fosters creativity and innovation. In contrast, a poorly assembled team can result in conflicts, inefficiency, and, ultimately, failure.
The Starting Team for a New Venture
a. Begin with the Right Founders
Choosing the right founders can be as crucial as the idea itself. The ideal founding team should encompass product and commercial founders with complementary skills.
Product founders bring their technical knowledge and innovation to develop the product, while commercial founders bring the business acumen and typically industry knowledge to the table. Together, they create a synergy that fosters the venture’s growth and success.
Bringing in 2 founders for a new venture has multiple benefits, including:
- Broadening the talent pool — in our experience, finding one person in the talent market that has both the commercial strength and product expertise is extremely challenging. By having 2 founders with a complementary skill set, we will be able to bring the needed capabilities into the venture faster by looking at 2 different talent pools, one for candidates with relevant commercial background and another one for candidates with strong product background.
- Creating more capacity — 2 brains are better than 1, and 4 hands are better than 2. In a new venture, many workstreams run in parallel and at full speed. With 2 founders at the helm of the new venture, loads can be distributed and balanced between the 2 founders, and the building and scaling of the venture can be accelerated.
- Providing checks and balances — with 2 founders in the venture and a proper governance structure, decisions and execution can be further optimized. Each founder would challenge and provide inputs to the other, and with each optimizing for the commercial and product aspects of the venture respectively, alignment between commercial objectives and product development can be ensured.
This model has worked well in all the ventures in our portfolio. Each of our ventures has a commercial founder and a product founder that are complementary to each other, not only in skill sets, but also in personalities, strengths, network, and a host of other characteristics.
b. Key Roles to Onboard at the Beginning
While every venture is unique, some key roles are universally important to consider onboarding early. Filling these roles at the onset ensures you have the expertise required to manage key areas of the business effectively.
These include technical leadership, sales and marketing, operations, and finance.
In our experience, beyond the founders, the following key roles are crucial to onboard at the beginning:
- Product — strong product manager(s) with prior experience in preferably similar ventures and a passion for the problem to solve.
- Engineering — at least one squad of engineers, either a full-stack engineer or a pair of frontend and backend engineers, supported by a UI/UX designer.
- Sales and Marketing — depending on the venture, an appropriate sales or marketing lead that can drive the initial sales and marketing of the product that the venture is offering.
- Operations — again, depending on the venture, someone to support the operations of the venture. If the person is junior, he/she can report to either the sales or product lead at the beginning.
- Finance — one person responsible to develop the budget, manage the cash flow and run the finance operations of the venture.
- HR — one person that is responsible for end-to-end people lifecycle management, with initial focus on recruitment, putting in place key HR processes and payroll.
At the start of the venture, the key hiring focus would be in the product and engineering team, followed by sales and operations. This ensures that the venture has a good Minimum Viable Product before marketing it to the target customers. Supporting functions like HR and Finance are crucial for hiring and managing the finances of the ventures, however, they tend to remain small, i.e. one person, until the venture gets traction.
Typically, the leads of the respective functions are hired first. This is to allow the leads to participate in defining the teams that they would like to build and to also ensure that the right people for the jobs are brought in.
c. Core Mindset and Skills Needed
We look at the initial team of a venture as a group of entrepreneurs. There are core mindsets and skills that we believe would make a good entrepreneur, and we look for them in each person joining the team.
As an entrepreneur, having the right mindset of getting things done and building a vision that is detailed enough to achieve is crucial. We believe the 4 core mindsets below are must-haves for everyone in the venture:
- Founder mentality — strong sense of ownership, focus on getting things done, acts with clarity of the trade-offs
- Coachability — ability to be coached and act on coaching
- Leading through doing — excited to get his/her hands dirty and takes responsibility
- Passion — take deep interest in solving the problems and the vision of the venture
Beyond the core mindset, we believe that everyone in the venture needs to have sharpness AND execution-mindedness. The 4 core skills below are what we look for:
- Problem solving — sharpness in getting the solution, detail focused, data-driven, analytical
- Execution — getting things done, overcoming obstacles managing operational issues
- Communication — ability to get ideas across, draw the insights, manage stakeholders
- Team leading — inspiring the team, building the team, building trust
These core mindsets and skills need to be assessed upfront in our selection process. While skills can be built, we found that it is much harder to change mindsets, and hence finding people with the right mindset is doubly important.
d. The Cash vs Equity Trade-off
A new venture with limited cash would need to extend its runway as far as possible, while continuously developing its products and pushing for traction. One of the biggest cost components for new ventures is the people cost, particularly the salary paid. It is important to balance salary levels with getting the right talent for the venture.
Equity, in the form of straight-up equity for founders and Employee Stock Ownership Plans (ESOPs) for the rest of the team, is a good tool to enable new ventures to conserve cash while at the same time enabling them to get the best talent from the market. Giving equity and ESOPs has also been proven to increase the sense of ownership of the venture in the founders and team, as they are more invested in the success of the venture. With a typical 4-year vesting period and a 1-year cliff, ESOP is also a good tool for talent retention as people want to maximize the amount of the shares and options vested.
In our ventures, it is common where founders or early team members join the venture with a cash compensation that is lower than what they used to make in their previous jobs. This is enabled by a conscious trade-off they are making between short-term cash compensation and long-term upside from their equity in the venture.
Attracting and Recruiting the Right Talent
a. The Talent Pool, Where to Look
Finding the right talent involves identifying the best sources. One way to do this is to map out the different talent pools for the roles being recruited.
For the founders’ position, a study by venture capital firm First Round Capital involving more than 300 startups and 600 founders found that some of the characteristics that best predict a startup’s success include the founders being in their 20s, having experience in a top tech company and come from a top school.
For product and engineering roles, stints in other tech companies and experience in building products from zero are the key characteristics to look for. For sales and operations roles, experience in the industry is a big plus. For support functions like HR and Finance, experience in other startups or experience in setting up structures and processes in their respective areas will be preferred.
Once the talent pools have been defined, the next step is to leverage the various channels to reach the target candidates. This could be online job boards, recruitment agencies, LinkedIn, or tapping into professional networks.
b. Building an Early Employee Value Proposition
It is often challenging to attract the best talent for a new unknown venture without a strong brand or size. To attract the best, an Employee Value Proposition (EVP) that goes beyond compensation is needed. While each venture may have a unique value proposition to their talent pools, some aspects that can create a strong EVP for a new venture typically include:
- Opportunity to solve a problem that resonates with the candidate and create a real meaningful impact
- Accelerated learning and development based on the fast-paced environment of a new venture
- A fulfilling work environment and opportunity to work with like-minded people
- Ability to grow personally and professionally alongside the growth of the venture
Having a strong and well-articulated EVP is crucial in ensuring that the venture is attracting a committed group of talent that works together towards the vision of the venture, and not mercenaries that focus on short-term compensation and will jump as soon as a better offer is received. It is hence important to articulate and reiterate the EVP in any interaction with the target talent pool, including any written and verbal communication throughout the recruitment process.
c. Educating Candidates on the Value of ESOP
Employee Stock Ownership Plans (ESOPs) can be a powerful tool for recruitment and retention. ESOPs allow employees to have a stake in the company, creating a sense of ownership and commitment. That said, not many candidates know the value of ESOPs, and the importance of ESOPs tend to be underestimated.
In the recruitment process, potentially some of the earliest interactions with the candidates, it is important to explain what ESOPs are, the structure of the ESOPs including their vesting schedule, and some sort of general projections to help the candidate assess its future valuation. Only then will they be able to make a proper trade-off and decision as to whether or not to join the team.
d. Accelerating the Process
In a world where there is a war for talent, the length of time taken for recruitment can make or break your ability to hire the right talent. While the venture should be thorough when selecting candidates, steps need to be taken to ensure that the recruitment process is as efficient as possible.
Some of the mechanisms we have used to accelerate the process include:
- Defining clear steps with tracked SLA, to ensure that there is clarity on each of the steps and timeline to complete each conversation with candidates.
- Using technology to streamline application tracking, interviewing, and onboarding. This can be done by leveraging an Applicant Tracking System, as well as tools to accelerate the assessment of the candidates, like HackerRank for engineering roles.
- Creating a dashboard that tracks the funnels and conversion rates for each step of the recruitment steps, and then problem-solving each instance of low conversion rates to finetune the communication and selection process. A feedback loop is put in place to ensure that the biggest drop-off happens early in the process, and not towards the end.
By implementing the above in our ventures, we have been able to accelerate the recruitment process significantly. In one instance, we were able to cut down the ratio of candidates identified to offer from 50 to 1, to 15 to 1. In the same instance, we were able to cut down average hiring days from 90+ days to only around 30 days.
We are also pleased to be an appointed venture studio of EDB’s Corporate Venture Launchpad 2.0. CVL 2.0 is an expanded S$20m programme by EDB New Ventures, designed to enable companies to incubate and launch a new venture from Singapore, supported by venture studios experienced in corporate venture building. You can also find out more on our website.
Interested to learn more about investable ventures? Drop us a line: firstname.lastname@example.org
Rangga Maharga, Partner at Wright Partners
Tan Toi Ngee, Founding Partner at Wright Partners