Last week I tweeted an observation about founders who are excellent at fundraising:

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Throughout my career I’ve consistently seen founders who are natural fundraisers also excel at recruiting top talent. 

One of the popular replies to that tweet observation was along the lines of “Yeah well once you raise money, the talent comes to you.” In response, I maintained that these founders are excellent at recruiting even before they close funding. 

This type of founder can make candidates lean in and get excited to join even before funding hits the bank.

I’m excited to highlight this reality here because it’s just another incentive to spend time improving fundraising skills.  

First, why the overlap?

When a venture capital investor evaluates a deal, she is looking for an opportunity to invest her fund’s capital at a valuation and experience a liquidity event where she can return a multiple of the investment to her limited partners.  It’s not an easy task, especially the earlier stage you go.  There is very little hard data for an investor to analyze that will help determine the chances of it being a successful investment.

Job market talent has an oddly similar experience.  They’re looking for an opportunity to invest their capabilities and time with the hope of some sort of future payoff. It’s just as difficult, if not more so, to determine whether the experience will be worth the investment for them.

Once you realize that new hires and VCs are both investing in companies, one with money and the other with time (opportunity cost), the overlap becomes very clear.

Interesting, but why is this important?

There is a ton of anti-VC and anti-fundraising attitude on the internet. You don’t have to look far to find a blog post, tweet, or comment that essentially says “why do we have to go through this artificial song and dance?” The underlying sentiment is that the work is all a huge waste of time. In a longer response (an essay for another day) I would go deep into the logical reasons why the idiosyncrasies (i.e. “song and dance”) of investing exist and how to address them.

My shorter response is that the work done preparing to fundraise effectively is not all wasted effort. In particular, because of the aforementioned similarities, so much of the work can be translated into how you recruit top talent! This is especially important because once you land a round of funding, the first thing you’ll deploy your capital around is hiring.

The Recruiting Parallels  

When someone decides to work for a startup, they’ll likely be paid less than their market rate. The expected tradeoff is that a near-term shortfall of salary will be made up by a combination of the future value of equity and the experience.  But how is a recruit meant to believe this new company will be worth billions in the future? How can they assume the work environment, culture, and growth opportunities in 2 years will be everything they hope?

They’ll be looking at a lot of the same signals that VCs pick up on, albeit with far less discerning eyes. These 3 are particularly important to focus on:

1. Story - That narrative you just honed for VC meetings? Don’t pack it away just yet. You’ll need to deliver that same compelling story to get a recruit to dream alongside you and believe that you will take them with you to the promised land.
2. Awareness - Taking actions to make sure the community is aware of your company is important in fundraising because it lets investors draw lines in their head about where your company’s going.  This might be even more important for recruiting as the impact of a brief mention from a friend, a headline view with your company name, or even a casual coffee can have greater influence on a new hire candidate than an investor who searches for companies all day everyday.
3. Credibility - A recruit is seeking the same assurance that investors look for in a founder’s ability to deliver. Building goodwill in the community is a fantastic way to generate the credibility that recruits will be looking for. This might sound like a large leap from goodwill to a positive reference on being a great founder, but it happens and is effective.  Don’t underestimate the value of someone a recruit or investor likes/trusts saying “Yeah, they’re great!” 
   

Not exactly the same

Of course recruiting and fundraising aren’t exactly the same. To make sure no one just copy-pastes everything I say about fundraising into their recruiting strategy, I’ll point out a few major differences. 

Availability - Unlike investors who generally will always consider a deal (I realize there are times VCs are between funds and have no capital to deploy), the most talented people in the world usually have gigs.  You can’t add anyone you find on LinkedIn with the title “engineer” to your active funnel. More so than fundraising, you have to establish connections and relationships with talent far in advance of actively recruiting because you can’t predict when they’ll be a free agent. Start meeting talent today.

Culture Fit - New hires are investing their actual professional lives into a company so the experience matters. Will they be happy working there? Do they fit with the culture?  Everything from the office to communication style to management approach affects that and can be the difference between landing a new hire or not.  Conversely, an investor does not need the culture to match them perfectly before making an investment.  When recruiting talent, ensuring you have plans to share the culture of the company can be key. Think about publishing a thought piece with your reflections on culture building.

Learning / Career returns - Venture capitalist investors care very little about anything outside of financial returns when making their investment. Talent on the other hand would like their equity to be worth something (financial returns) but also will be focused on how the experience furthers their career win, lose, or draw.  You’ll need to incorporate how you want this company to fit into a new recruit’s journey as you share your vision if you want to be successful.

So Fundraising and Recruiting…close cousins in the game of startups and both essential to excel at!