There is an old expression in the Venture Capital business, coined initially I believe by John Doerr, that VCs are really just glorified recruiters. Given a number of portfolio company searches I have been involved with over the past few months, this is definitely feeling like the case.
So while I think the entrepreneurs in our portfolio companies do the real leg work in recruiting, and being an excellent recruiter and team builder is a key skill of the executives we back, there are a few important contributions a strong venture capitalist can bring to an executive search at a portfolio company:
- A broader context. If a founder of a company is looking, for example, to recruit a VP of Sales, depending on what they have done before this could be their first time doing so. An experienced venture board member, on the other hand, might have helped recruit dozens of such executives which provides a broader context in which to assess the executive's skills and fit with the given company.
- An extended network from which to surface candidates. This can result in the VC surfacing up a specific candidate, or knowing enough people who themselves can surface up candidates.
- An ability to more deeply reference check a given candidate. As anyone who has recruited executives knows, reference checking the candidate's background is critical to understanding their skills and fit. But being able to do so "off-list" is even more important as the key to references is not speaking to the people the candidate provides, but rather understanding who, and speaking with, the references they don't provide. By the nature of having been involved with many companies over the years, a good VC will often be able to get to these off-list references more readily than the executive team.
- An ability to help provide a candidate a third party perspective on the business and why it may represent a good fit for the candidate. Talented folks will always have other choices and the best candidates will want to do significant diligence on the opportunity. While not completely unbiased, a venture investor can often provide this perspective and share diligence on what led to their investment decision.
- An ability to keep executive search firms honest. Search firms, while often an important part of a successful recruiting process, need to be managed to avoid them slacking off at the end of a long search or promoting candidates to finish the search regardless of whether the particular candidate is a good fit. A recruiter is less likely to do this with the involvement of a venture firm given that the venture firm often represents a long-standing relationship and a steady stream of referrals.
So if you are an entrepreneur looking to build out your team, put your venture board members to work!