The new rules for startup hiring

It starts with two people sitting down and having a conversation. Just maybe, it leads to another conversation. There has to be mutual interest for it to work, but there’s often a pursuer and a pursued. Eventually, if all goes well, both parties make a decision that affects their daily lives. Obviously, there are differences (last I checked, most people have more jobs than they have life partners), but in essence—these are highly competitive and deeply interpersonal markets. And in startups right now, particularly for go-to-market and engineering talent, competition has gotten wild. 

“It’s a hiring free-for-all,” said Rhys Hughes, GV executive talent partner. “There’s, of course, the [AI] bonus hilariousness out there, the great talent auction, and all the things making it competitive. Right now, with our portfolio companies, I’m spending a ton of time with them on this proactive approach. If a founder says to me, ‘I’m open to a rec,’ I say: ‘You’re already late. You should already know three to four people.’”

I spoke to six founders and VC firm talent leaders, and there was agreement—we’re in a new era of hiring for startups. Once, it was a “growth at all costs” game, characterized by soaring headcounts. Those days are over, replaced by a push for companies to run leaner teams of exceptional people—who are often already established in their careers. 

“The biggest thing I’ve noticed is that people care a lot more about talent density than about headcount growth now,” said Atli Thorkelsson, VP of talent network at Redpoint. “I think what’s feeding into it is this: There’s more you can automate now, especially within engineering and all kinds of other functions. You can automate a lot of junior-level work, so what you’re really looking for is higher-level thinking. There’s a culture, or ethos, right now—whether it’s true or not—that building the next really cool AI product may be harder than building the great SaaS products of the past.”

Thorkelsson and Redpoint released a report this year that showed that while demand for mid-level and senior talent is high, demand for entry-level talent is declining rapidly across startups. This is naturally linked to AI—as the technology develops and changes quickly, track records and adaptability matter more than traditional credentials. 

“For a while, I was really focused on: Have you done it before?” said Garrett Lord, cofounder and CEO of Handshake. “Now, after hiring hundreds and hundreds of people, I’ve really learned it’s more about learning agility, judgement, and work ethic than about you spending four years at Meta.” 

Lord has chased potential hires across the globe—even recently meeting a prospective executive in Dubai. He says the competition for AI talent is as intense as conventional wisdom right now suggests. 

“If you’re remotely connected to or have worked at one of the AI companies, there are seed funds that will just write you a check on the spot,” said Lord. “You could own your own company. You could go to a big company, and cash in on public [restricted stock units]. Not Meta-style, but significantly more money than many folks have ever seen.”

So, if you find a great candidate, don’t hold back.

“My advice to founders is that when you find a candidate you like and that first meeting goes well, lean into them,” said Paula Judge, VP of talent at Accel. “Start texting them immediately, and build the relationship. Let them know how you’re going to work with them. Act like you’re working together. Show them what it’s going to be. That’s really the dance. That’s how people and companies differentiate. People do say ‘I took this job for less money because I really liked the people.’ Candidates are looking to do their best work.” 

To compete, you have to start early, said Eléonore Crespo, cofounder and co-CEO of Pigment. 

“I think of it like what sports teams do to find the future stars,” she told Fortune via email. “They look at 16-year-olds that show promise, and they keep tabs until the moment is right. I try to do the same every day.”

It’s an essential point, said GV’s Hughes—as in sports recruiting, the long game matters. 

“The best founders are building relationships with talent long before they need them,” he said. “So when they do give them that call, that person will take that phone call, because you’ve invested the time. That’s going to be the currency that matters most for our companies as they hire and scale.”

And, of course, as in dating, hiring is only the beginning: Once someone’s in, it’s tougher and more important than ever that they stay, said Jen Holmstrom, Notable Capital partner. 

“Once you get them in the door, how do you ensure that particular talent is going to stay invested?” said Holmstrom. “Do they feel they have autonomy, that they have room to run, that they’re trusted? You have to create an environment where you retain them, keeping them with you on the journey. And that responsibility sits with the founder. It sits with the leadership team. And it’s not easy to do. It’s not to be underestimated.” 

See you Monday,

Allie Garfinkle
X: @agarfinks
Email: [email protected]
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Venture Deals

– Plancraft, a Hamburg, Germany-based developer of AI software for tradespeople, raised €38 million ($44.2 million) in Series B funding. Headline led the round and was joined by existing investors Creandum, HTGF, and xdeck.

– Topline Pro, a Boston, Mass. and Brooklyn, N.Y.-based developer of AI software designed for service professionals, raised $27 million in Series B funding. Northzone led the round and was joined by Tactile Ventures, Industry Ventures, Forerunner Ventures, Bonfire Ventures, TMV, Flybridge, and BBG Ventures.

– Cache, a San Francisco-based developer of a platform designed to let investors swap concentrated stock positions for diversified portfolios while deferring capital gains taxes until they sell, raised $12.5 million in Series A funding. Bill Trenchard at First Round Capital led the round and was joined by others.

– VibeCode, a San Francisco-based app designed for building other apps, raised $9.4 million in funding from 776 Fund, Long Journey Ventures, Neo, First Harmonic, Afore Capital, and others.

– Qloud Games, the Sydney, Australia-based developer of the Loftia video game, raised $5 million in seed funding. BITKRAFT Ventures and GFR Fund led the round and were joined by Andreessen Horowitz (a16z), 1UP Fund, and Gaingels.

– Waterly, a Crystal Lake, Ill.-based developer of software for water data collection, raised $4 million in Series A funding. Burnt Island Ventures led the round and was joined by Emerald Technology Ventures.

– Better Medicine, a Tartu, Estonia-based developer of AI software designed to improve kidney cancer scans, raised €1 million ($1.16 million) in pre-seed funding. Soulmates Ventures led the round and was joined by Specialist VC, UT Ventures, and angel investors.

Private Equity

– FMS Solutions, a portfolio company of New Heritage Capital, acquired Merchants Accounting Services, an Oakland, Calif.-based provider for accounting and consulting services for restaurants and hospitality businesses, and AMP Services, a Seattle, Wash.-based provider for accounting and consulting services for restaurants and hospitality businesses. Financial terms were not disclosed.

– Invicti Security, backed by Summit Partners, acquired Kondutko, a Wilmington, Del.-based security vulnerability management platform. Financial terms were not disclosed.

– LawnPRO Partners, backed by HCI Equity Partners, acquired Concord Custom Lawn Care, a Bow, N.H.-based lawn care company. Financial terms were not disclosed. 

– Nexa Equity acquired a majority stake in Facility Grid, a Brookline, Mass.-based provider of commissioning and operational readiness software provider. Financial terms were not disclosed.

– Wilmar, a portfolio company of Rainier Partners, acquired EZRED, a Denville, N.J.-based designer, manufacturer, and distributor of lighting, tool organization, and hand tools for the automotive aftermarket. Financial terms were not disclosed.

Exits

– Gridiron Capital acquired ABC Legal Services, a Seattle, Wash.-based process servicing company, from Aquiline. Financial terms were not disclosed.

– Pennington Creek Capital acquired Rite in the Rain, a Tacoma, Wash.-based stationery products company, from Capitol Peak Partners. Financial terms were not disclosed.

– THL Partners agreed to acquire Headlands Research, a Lake Worth, Fla.-based network of clinical trial sites, from KKR. Financial terms were not disclosed.