Established companies aren't the only employers hiring again amid an improving economy. Recruiters are reporting an increase in demand for senior talent from many young companies, thanks to a boost in venture-capital investing.
Funding in late-stage start-ups (those at least four-years old) grew by nearly 50% in 2004 to $7.2 billion, according to a survey by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association. In the first quarter of 2005, venture capitalists invested $1.8 billion in late-stage funding, up from $1.4 billion in the first quarter of 2004, according to their most recent survey, released in April.
Greg Ambrose, president of Catalyst Search Group, a Chicago firm that specializes in recruiting for new technology firms, says search assignments at his firm for senior executives at late-stage start-ups have increased by 30% in the past 12 months.
To secure leads and get your foot in the door at a start-up, consider the following five tips:
1. Be prepared for a challenging search campaign.
Unlike larger companies that advertise or post job openings on corporate sites, many venture-backed start-ups rely solely on networking contacts or executive-search firms to find new recruits, says Bob Marshall, managing partner at Selby Ventures Partners, a venture-capital firm in Menlo Park, Calif. To learn about opportunities, tell people in your network -- colleagues, recruiters, industry analysts and others -- that you're interested in joining a start-up.
Cerebra Inc. is among the start-ups filling out their ranks. Since receiving additional funding in 2004, five senior professionals have been recruited to the four-year-old enterprise-software company in Carlsbad, Calif. It now has about 40 employees and expects to recruit several senior engineers and sales pros this year, says Vickie Farrell, vice president of marketing.
Ms. Farrell got her job through networking, after learning about Cerebra, (formerly Network Inference) from a contact at a venture-capital firm. After researching the start-up, she agreed to have her resume forwarded to its CEO, who hired her in 2004. "If you establish a good reputation and relationship with venture capitalists, they'll consider you for jobs at new start-ups that join their portfolio," says Ms. Farrell.
In 2003, Ron Sege learned from a venture capitalist and former colleague that Tropos Networks, a four-year-old start-up in Sunnyvale, Calif., was searching for a chief executive officer. At the time, Mr. Sege was chief executive officer of a telecommunications-equipment start-up, helping it restructure after the dot-com bust. He and his former colleague had worked together 10 years earlier at a technology company in Massachusetts. They stayed in touch when each moved on to different jobs, and Mr. Sege expressed interest in a CEO job at a start-up offering cutting-edge technology. He joined Tropos in 2003.
2. Show off your enthusiasm and experience.
Madeleine Todd, the San Francisco-based recruiter who hired Mr. Sege, says she was impressed by his passion for the company's mission and its industry. Now passion is the No. 1 quality Mr. Sege looks for in candidates he interviews for jobs at Tropos Networks. The company recruited 40 new hires in 2004 for a total of 65 employees, and plans to double its staff in 2005.
In general, new companies also prefer professionals with experience in their industry over newcomers, says Mr. Marshall. "Candidates should demonstrate that they understand the market and know the customers," he advises.
3. Be prepared for a short-term pay cut.
Fledgling companies are attractive to many professionals because they offer potentially lucrative long-term financial rewards. "You'll make less on a salary basis, but you'll get stock options that could well make up for the lower salary if the company succeeds," says Mr. Marshall, who receives about 10 to 15 resumes a week from professionals looking to work in one of his firm's portfolio companies.
Total compensation (including salary and bonus) for CEOs at venture-backed firms is a median $252,000; vice presidents earn a median $170,000 annually, according to a recent survey from VentureOne, a research firm in San Francisco and a unit of Dow Jones & Co., publisher of this Web site.
Start-ups also lure many midlevel professionals seeking a fast-track to the corporate suite. "They offer people with experience in various segments of a company and who [have] managed a significant number of people the opportunity to advance to CEO faster than at an established company," says Mr. Marshall.
4. Be prepared for a tough interview.
Of course, start-ups take precautions when courting new talent. "Hiring managers will question your interest in them, especially if you're coming from a good company and are willing to accept a lower salary," says Ms. Farrell. Come prepared with answers as well as a list of suggestions on how you'd help grow business, she adds.
"They have limited funds, and every slot they fill is a drain on those funds," says Mr. Marshall. Therefore, start-ups are likely to evaluate you as closely as you evaluate them, he says. "They are very sensitive about their plans and with whom they work," he explains. "They want to make sure they get the best people possible for each job."
5. Make sure you've vetted the company, too.
The recent boost in venture-capital funding "doesn't diminish the need for job hunters to carefully evaluate the fundamentals of a start-up," says Mr. Ambrose. Consider that one-third of newly formed companies fold within two years, according to the U.S. Small Business Administration.
-- Ms. Needleman is associate editor at CareerJournal.com.
Article from CareerJournal Today – May 2005
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