Today's market is full of activation energy, even though the pandemic continues. There was plenty of capital, a focus in distributed investing, more first check investors than ever before and, fittingly enough, a parade new startups.
However, even the most ambitious founders can be overwhelmed by momentum. It is crucial for founders to invest in a balanced, growth-focused way when they are starting a company. TechCrunch Disrupt 2021 was held last week by Harlem Capitals Henri PierreJacques and BBG Ventures Nisha dua. They discussed how founders should spend their newly raised funds in today's economic environment.
Even though personal finance is different for founders, the investors used their knowledge of portfolio companies and their own ethos as a guide to offer general advice about everything from how to invest in new talent to the importance to having an emergency fund.
Hiring 101
Dua immediately addressed the elephant in a room: Hiring. Startups have always had a difficult time hiring. They are less resource-strapped than companies like Facebook, which can offer engineers a $1,000,000 signing bonus with no strings attached. Investors and founders tell me that it is becoming harder to hire as a growing number of high-value startups rise up with impressive valuations.
Dua believes it is right that hiring should be at the top on every founders' list. However, she encouraged those listening to to think backwards.
Because there is such a demand for talent, it's both easier and more difficult to raise than to spend. Every company will have a different answer to the question of where to spend. Many of us will admit that we are not great at budgeting or planning in our personal lives. We must be great at this in order for our businesses to succeed, grow and reach profitability. So we challenge founders to articulate their North Star. What is your plan? Is that plan feasible to reach the North Star? You won't reach the North Star within the first 18 months of your first check. However, you will have milestones to get to the first hurdle. Think about the things that will make this company the most successful in pursuing that greater North Star. The top priority is certain to be hiring.
Pierre-Jacques used Pangea, his portfolio company based in Miami, as an example of how he has seen entrepreneurs navigate the talent battles. Founders need to be able to let go of the hiring process.
