WHY DO FOUNDERS HAVE A DIFFICULT TIME RAISING CAPITAL (Part 5 of 10 Series)
By:

Sara Rauchwerger
Managing Director
Companies in the early stages of building a product or service continue to evolve, with continuous planning to reach targeted milestones (as discussed in the Introduction and Part 3: Building Early Processes and Procedures). Building a dream team is included in the planning process as the company proves its ability to reach its target customers. However, building a dream team (as described in Part 2: Build a realistic organizational structure) requires creative resources when funding is lacking. One key point of evaluation for investors is a company’s ability to manage resources effectively. Hence, demonstrating that the company understands it cannot easily hire but has a solid plan for building the team in the future, shows strategic foresight and resourcefulness. This approach not only highlights fiscal responsibility but also strengthens the company’s appeal to investors, increasing its potential to secure funding. In Part 5 of this series, we will provide some creative resource ideas on how to build a team.
PART 5 – Plan ahead to acquire/steal talent
Introduction
Navigating the early stages of a startup involves a delicate balance between assembling the right team and maximizing limited, often scattered resources. This balance is particularly challenging because you are developing an idea for a market opportunity that carries inherent risks and uncertainties. The market might not fully embrace your product or service, creating an unpredictable environment with potential pitfalls.
Despite these challenges, determination and thorough research can uncover significant opportunities for success. But how do you effectively reach these opportunities without having access to the ideal team, resources, and lack of sufficient funding?
In this article, we propose some creative hiring strategies that, with a bit of strategic planning and innovation, can help build a solid foundation.
Hiring Talent
Hiring the right people is by no means an easy task, but it is essential for building a successful company. Finding the right talent with limited or no funding is even more daunting. To overcome this challenge, consider casting a wide net and exploring these five potential ways to build your team:
a. Equity-Based hiring is a risk/sweat equity investment for the employee or cofounder, with the potential for financial rewards if the company succeeds. This approach allows the company to manage cash flow while attracting and retaining a dedicated team willing to take ownership and a stake in the company’s success.
b. Part-Time Talent with specialized skills that can be hired on an hourly basis, with the potential to transition to a full-time position in the future.
c. Internships and Apprenticeships offers the company free or low-cost services allowing individuals to gain valuable learning experience while potentially growing into a permanent role. Be aware that this can be time-consuming, as it involves training these individuals, but it can also be rewarding, as it advances both the individual’s career in exchange for advancing the company’s growth.
d. Remote Talent and Freelancers help expand your talent pool beyond geographic limitations, allowing you to tap into a global market of skills, often lower in cost. This approach also enbales you to leverage these resources to test your product or service in a global market potentially aiding in customer acquisition.
e. Advisors and Mentors are abundant, with professional expertise in your industry are often willing to provide strategic advice and insights, sometimes for free. While they may not always engage in hands-on work, they can be invaluable in leveraging their experience and networks to open doors for future hires, partnerships, and customer acquisitions.
Focus on Generating Revenue
Generating revenue at scale should be a primary goal for attracting talent, as it demonstrates the company’s viability and appeals to investors. With the available talent, focus on building a product or service that generates revenue or, at a minimum, secures a commitment from a customer(s) willing to buy. Keep operations lean and accurately evaluate your hiring needs to maximize the impact of your available resources, ensuring that every effort by the existing team contributes directly to customer acquisition, growth and revenue generation.
This approach helps prove your business model to potential employees and, more importantly, to investors, accelerating investment opportunities.
Foster A Positive Company Culture
A positive company culture is essential for attracting top talent as the business grows. As discussed in Part 1, nurturing this culture is key to building the right team for your company. Therefore, create an ideal candidate profile and take the time to understand the requirements of each role you need to fill. Strive for a balance between industry-related technical skills and the candidate’s ability to communicate effectively within a team environment.
The company’s vision and values should be clearly articulated, creating an inspiring work environment where team members feel valued and motivated. As highlighted in Part 2, always foster a sense of community by acknowledging hard work and contributions to each milestone that brings you closer to your listed goals. Empower your team to take ownership, which will help accelerate growth.
Where to Find Resources
There are numerous free or low-cost resources available for early-stage companies to help build a team without significant financial investment. These resources range from your personal network to individuals working for your competitors, as well as a wide array of online platforms, job boards and community or industry- specific events. Initially you will need to invest more effort to find the right talent until you establish a brand and create an environment that attract the right audience that aligns with your internal culture.
Legal Obligations
Although funding might be tight and resources limited, making legal mistakes during the hiring process can be costly, both for the company’s long-term survival and its ability to attract funding. Many agencies and legal professionals can provide guidance on employment law, legal obligations, structuring job offers, and offering benefits and equity whether locally, nationwide or globally (especially if you hire remote workers). These professionals often offer free services for early-stage companies and are eager to grow alongside the business. Hence, it is advisable to seek out their expertise before hiring or adding a team member to ensure the right structure is in place.
Conclusion
By strategically planning and utilizing these resources, early-stage companies can effectively build a strong team that drives growth and positions the company for long-term success while enhancing its appeal to funding opportunities.