Last Updated Mar 6, 2008 8:57 AM EST
This is only partly true. If you want a CEO or CFO, then, yes, your venture funding partners can help recruit top names. But if you are filling out other executive positions, it might be wiser to broaden your source list for recommendations.
That's the upshot of recent research on startup hiring by Harvard Business School professor Noam Wasserman, who studies entrepreneurial management. If you are in a new firm looking for talent, the numbers suggest you not put all your recruiting eggs in one basket.
In Wasserman's survey of 240 IT ventures, the primary sources for executive hires were the current or past CEO, 39%; a current non-CEO member of the management team, 29%; and investors such as VCs, 18%.
But it turns out the investor referrals were primarily for two positions: CEO and CFO. Wasserman finds that across almost all executive positions, "investors consistently served as the source for 10-18% of executives. The major exceptions were for the CEO and CFO positions, for which the percentages jumped to 28% and 30%."
Why don't investors play more of a role in management recruiting for their portfolio companies? One of Wasserman's blog commentators, a VC himself, suggests the primary reason: "The bottom line is that if a VC brings in the right CEO, the rest of the management hiring needs may be adequately taken care of by the CEO."
Another interesting question from the study. Why don't headhunters rate among the top three recruiting sources for start-up management hires? What do you think?
(Hiring image by madebytess, CC 2.0)