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How to Utilize VCs When Filling Your Executive Team

If you learned anything from being in business these past years, it’s that working well with venture capitalists can have a major impact on whether your company succeeds or fails. VCs obviously are useful when it comes to raising money for your company, but they also can be useful when it comes to getting the word out to the best executives to work for your company.

A lot of the time, VCs are portrayed by the media as shadowy figures with big bank accounts, the veritable Daddy Warbucks who keeps the lights on and keeps the computers glowing. But good investor teams have a network that is just as valuable as their bank account. If you’re not talking to your investors about hiring, and running your needs by their executive search consultant along with them, then you may even be wasting their money.

Whether they make a major investment or not VCs can provide business advice and help you navigate the rocky waters of the current market landscape. A lot of entrepreneurs check in regularly with their VCs to get introductions to potential clients, but the introductions to job-hunting executives are equally valuable.

A VC may have a large amount of experience with a candidate or person, giving them the confidence that they are a fit based on knowledge of the person and the company looking for the person,” said Dave Hendricks, COO of LiveIntent. “They are not blindly matching, but operate on reputation and a personal connection more than on a formal reference review.”

VC investment is in some ways a double-edged sword. Money is invested to reward companies for developing winning business models, but with the investment comes the need to grow. When companies grow, it’s difficult for the CEO and founders to run the company themselves. They need a reliable executive team that shares their vision and will help the business accelerate, so it returns the initial investment.

This is where VCs come in handy. After all, their purpose is to help businesses grow, so they have experience working with executives with proven track records. For first-time business owners especially, the VC absolutely must be part of your interview team. They’ve worked with superstars, they’ve seen hiring mistakes, and they’ve probably seen diamonds plucked from the rough. Leverage this experience.

“Once you’re working with a VC, they become part of your board and their opinion carries a different kind of weight, said Hendricks. “We’ve met with many engineering candidates as well as many high profile sales candidates and our VCs have given us feedback on dozens of them. It’s often been the kind of feedback that has saved us from spending time with folks who they don’t think would be a great fit for our company based on their experience – adding value even for engineering and sales candidates, not just strategic or corporate ones.”

Prepare for interviews by sitting down with the VC and outlining what kind of candidate you’re looking for. If there are differences in vision, discuss them with the VC prior to interviewing. You should be looking for the candidate that best fulfills the role, not the one who looks best on paper.

Don’t stop once you’re fully staffed either. There are many signs of business growth, including higher revenues, increased investment, and new locations. And just as your business will often outgrow an office, it can also outgrow executives (or vice versa). The world of venture capital has different firms that specialize in different funding rounds, and there are executives whose expertise lies in different stages of the company.

Some people simply have an entrepreneurial spirit and are only interested in running small companies. When you reach the point where it’s time for a change in our C-suite, talk to your VCs about who can take the company to the next stage. If you’re one of these executives and want to focus on start up culture, get close the VCs themselves. Chances are, they’ll help you find your next gig as well.

Entrepreneurs seem a bit wary of leaning too heavily on their investors, and perhaps with good reason. Asking just a few of the right questions may be strategically invaluable though. After all, they probably know hundreds of people and obviously have navigated the start up road before. They may have some of the answers you’re looking for.