“Coming together is a beginning; keeping together is progress; working together is success.”

Henry Ford

Who do you need on your Team?

1.    The Founding Team

Your choice of founding team will have an enormous effect on the future success of your business. For one, the need to have a team that shares common goals, has a relationship of trust, works well together and whose skills complement the requirements of the business is self-evident.

Of equal importance, and tied in with this to some extent, is the need to have a team that will impress potential investors. Your team will constitute an entire slide of your pitch deck, so it had better be impressive. Investors will invest in a team they believe will succeed. At Angel Investment Network, we’ve watched for years how prospective investors evaluate business documents; and we can tell you that they spend a considerable amount of time looking at the team members with their experiences and competencies.

Think about it, if you were considering investing in a company and the founder had previously had a successful exit, it could really tip the balance in your decision making.

Choosing your founding team is, therefore, not to be taken lightly. Moreover, it should be one of the first hurdles you jump over in founding your business. You do not want to be wasting time, energy and money 6 months down the line trying to sort out who is on the founding team and what stakes they have in the company.

To help you with this process, here are some important considerations to take into account:

i.    How big should your founding team be?

“If you can’t feed a team with two pizzas, it’s too large.”Jeff Bezos, Founder of Amazon

 
Most evidence, both statistical and anecdotal, seems to indicate that larger founding teams increase the chances of success. That is to say, founding teams of 3-4 people are superior to a one man operation or anything larger. There are a number of reasons for this:

-    Functional diversity- 4 founders can bring different skillsets to the table. This allows essential elements of the business to be dealt with at the same time rather than one man trying to do everything even when he is not fully qualified to do so.
-    A 4 person combination could theoretically quadruple the size of your company’s early network.
-    If the founding team is too big, you may encounter problems such as slow decision-making and not everyone contributing.

ii. Who should be on your founding team?

-    This will vary according to the specific requirements of your business but a team with a good mix of complementary skills is an obvious starting point. One for technology, one for sales, one for operations, for example.
-    People you know and trust as it is this relationship that will set the tone for the whole company.
-    People who share the same goal and have the same concept of success for your company.
-    Previous experience (especially successful experience) in startup companies is a massive advantage.
-    Previous management experience is also very useful.
-    In an ideal world, people you have worked with before in a similar environment can make the process easier and the chance of success higher.

For apportioning equity between the founders please see the previous section in this course.

iii.    Where to find them?

This will depend very much on who you are looking for. But, with the exception perhaps of a technical founder, you are unlikely to start a company with someone who falls outside your professional network. As such you have a number of avenues open to you:

-    University contacts
-    Previous/current work colleagues
-    University professors
-    Contacts within your network
-    Successful entrepreneurs
-    Venture Capitalists
-    Angel Investors

The last two are worth noting in particular; these are unlikely to bring money alone to the table but will be able, and indeed will have an active interest, in offering their valuable expertise, experience and network in order to help your business succeed. Choosing the right investor during the early stages can be of paramount importance to the ultimate success of your venture.

In regard to finding a technical founder, if you have no technical experience, it might be worth considering employing a technical advisor to help you screen and interview potential candidates. Additionally there are numerous recruitment sites dedicated to matching startup companies with top talent.

In truth, if you have a clear vision of the direction you see your company taking, you will most likely know the type of people you want to help you found the company. In line with this, you will know people within your network that can help with this process; their advice will be very useful. If not, professional advisors and trusted recruitment sites can help you solve this.

2.    Hiring

"When you're in a start-up, the first ten people will determine whether the company succeeds or not. Each is 10 percent 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 percent of your people are not so great? A small company depends on great people much more than a big company does."  

Steve Jobs

Hiring a skilled, motivated and diligent workforce will necessarily be of the utmost importance in achieving growth and success for your startup. As such, it is a process that should be taken seriously; all the more so because the smaller the number of people working for a company, the larger the percentage influence each individual will have on the success or failure of the enterprise.

The skill to investing in startups is being able to predict success. Part of the semi-qualitative process that investors go through when trying to do this, is gauging the competency of the company founders. Hence your ability to set out your plan for hiring and scaling your company will be an important factor in an investor’s decision to give you funding.

• Identify Positions - in any given company there will be a variety of roles that need filling and this will increase as the company grows. Identifying which roles your company needs is the obvious first step.
• Prioritize- once you have identified the required positions, it then becomes necessary to work out which position needs filling first. This will hopefully be apparent from the circumstances your company is in at that moment in time. If it is not apparent you probably do not need to hire anyone.

It is important to know when to hire and when not to: hiring a role too early, i.e. before there is sufficient demand for it, will needlessly burn capital.

3.    In what capacity should I hire them?

-    Full time vs Partner - if you hire someone full time you take on all responsibility for them including, obviously, their salary; if you partner with a firm that fulfils the required role then you offset the risk of taking on another salaried employee, you avoid the delay of getting someone up to speed and you only have to pay when there is actually work for them to do. During a company’s early stages, partnerships constitute better ways of filling many of the roles required as they help avoid cash flow problems.

-    Full time vs Contract/Consultant - this follows a similar line of argument to ‘Full time vs Partner’. A contracted employee will only work when there is work for them to do, and will be paid accordingly. Moreover, if their work is not up to standard you can avoid the indignity and hassle of sacking them by just not calling the contractor in for more work. Additionally, if you get on well with them you can consider changing their contract to full time employment at a later date when the company is more stable and a fixed need is apparent. This has additional benefit in that you can avoid paying (in the UK) their National Insurance and other tax costs.

4.    Who?

This is where having a solid network is helpful. Equally, being able to screen good candidates from recruitment sites can be an invaluable skill. No one will know better than you who you want to work with.

In startup companies it is essential that you get along with your employees on both a personal and professional level with your employees.

While you may have a good idea of type of person you want working for you, or at least know them when you meet them, for the more technical roles in which you may have very little experience, the screening process becomes more difficult. Here is where your network and contacts can be particularly useful as the chances are you know someone who knows someone who has used and can recommend an excellent web builder, for example.

A further consideration during the early stages of your company might be to favour so-called “stem cell employees” who are able to react, adapt and contribute meaningfully to the varying needs of a startup in its early stages.

Interns can be a low risk and cost-effective strategy. University graduates looking to broaden their skillsets, top-up their CVs and find an exciting niche in which to excel, can provide enthusiastic and capable workers happy to work for very little (at least initially). And if you don’t like them, they can be out the door in no time (depending on your agreement with them). If you do like them, you have found a capable employee, enthused and desperate to add value, who will also harbour a sense of loyalty to you for the opportunity given.

5.    Interview:

Before the interview it is worth setting a small test for your candidates in order to help create a shortlist. This will save you time and energy by avoiding needless interviews with weaker candidates.

Necessarily, these tests will vary according to the position offered. But if you are looking for a ‘stem-cell employee’, asking them to review your website/idea and suggest improvements is a good way of gauging their enthusiasm, acumen and written skills.

Once you have your shortlist, then comes the interview.  Interviews for startup companies are, more often than not, just as much about the candidate finding out about you and your company as you finding out about them. As such interviews frequently have an informal tone; and you may find yourself doing more of the talking than the candidate. Examining how they respond to the way you talk about your company can be a good way of gauging their interest, their motivation and their ability and desire to engage.

This is less true for technical roles where you may want the advice of an expert to help evaluate a candidate. That said, no matter how confined to the backend you envisage them being, it is still important in a small company to be able to connect.

6.    Trialling:

As mentioned above hiring someone full-time straight from the interview can be a risky strategy. It is far better to take on them on a contractual basis or as an intern. That way you mitigate your risk if they fail to contribute valuably.
A useful, albeit slightly hackneyed, way of looking at the hiring process, is to consider it not as hiring employees but as finding team members who share your passion and vision, and desire to contribute to it and move it forward. Team players will create energy; non-team players will sap energy. You want energisers not sappers!

What’s this got to do with fundraising?

If you take seriously the ‘how's’ and ‘why's’ of your hiring process not only will you help your company’s chance of success but in so doing you will demonstrate your competence and diligence to potential investors which will further increase your chances!