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Raising money for your startup Step 9: Hire the right team to build your startup
It’s common knowledge that many investors will look at the strength of a team first and the product or service offered second. This is because the team is key. An “A grade” team can still make a “B grade” idea work because they have the potential to make the product work through their knowledge, drive, and passion.
You can find out more about team management and the importance of hiring a great team in our post, The 5 Ms of Investing.
Often, investors don’t see a one-person team as a viable investment opportunity and are often reluctant to invest. One person can’t cover all of the necessary roles in a business and a team is needed in order for a startup to successfully execute its high growth potential.
What is a team?
Your team can be broken down into two sections:
This side of the team is responsible for ensuring that your startup operates successfully on a day-to-day basis as you grow. These employees usually have defined roles and responsibilities.
This side of the team is made up of the people you trust to advise you. An advisory board is a body which provides strategic advice to the management. The people you choose for these roles can say a lot about your business
If you are looking at raising money but are at such an early stage that you are the only team member, you should have outlined the roles you have identified and will soon be looking to fill within your startup, prior to approaching investors.
How to build an investment-ready team
The articles below offer some fantastic advice on how to find your killer team, both operational and advisory, and give your startup the best start when it comes to raising money from investors.
Being able to hire the right people depends a lot on your hiring skills. In fact, hiring is perhaps one of the most important management skills you could possess as having a great team is crucial to the successful execution of your business' potential.
In this article, Tatley looks at former Apple CEO, Steve Jobs' thoughts on recruitment and the importance of each hiring decision he ever made (over 5000 of them!). According to this post, hiring a team which investors will more likely be interested in, comes down to two key things:
- Improving your hiring skills to ensure that you are able to improve employee performance and productivity, employee engagement, and employee retention.
- Implementing a robust recruitment process which shows your recruitment process from start to finish, ensures that you have all the tools and resources in place for each step of the process, and ensures that you don’t skip any vital steps.
"Assume you’re by yourself in a start-up and you want a partner. You’d take a lot of time finding the partner, right? He would be half of your company. Why should you take any less time finding a third of your company or a fourth of your company or a fifth of your company? When you’re in a start-up, the first ten people will determine whether the company succeeds or not. Each is 10% of the company. So why wouldn’t you take as much time as necessary to find all the A-players? If three were not so great, why would you want a company where 30% of your people are not so great? A small company depends on great people much more than a big company does." - Steve Jobs
If, like many other business owners, you believe that people are your most valuable asset, you’ll understand how important it is to make sure you hire the right people, which can be easier said than done.
Morgan’s point on “Employer brand” stood out for me as it discusses the importance of employee engagement and thinking about why people would want to work for you. Aside from their salary, what benefits will they receive, and how can you show them how great it would be for everyone if they joined your team?
Remember: people don’t work for jobs, they work for companies. - Richard Morgan [tweet this]
Show potential employees what your business is about, why you’re doing what you do, and why they should want to be a part of your growth journey.
People with complementary skillsets to your own should be the ones you target in the early stages. Prior to raising money, you may not be able to afford to cover hire enough employees to cover every base in the business and some, including yourself, may have to double up on roles. This is why it is important to look closely at what you are good at and be honest about the things you’re perhaps not so good at. By using your strengths and weaknesses in this way, you can start to build a strong team which can work well together and learn from one another.
Cohan writes about the need to attract, recruit, and retain people “who are better than you” and suggests that this can only be achieved by being able to properly sell your vision through your passion for the business.