At a recent panel discussion jointly hosted by the Venture Capital Association of Alberta and the Canadian Venture Capital Association on "Best Practices for Building Venture Firms in Canada", Jason Peetsma, Managing Director, Odgers Interim, spoke out on the key talent challenges faced by Canadian firms. From his experience recruiting executives for venture firms, start-ups, and scale-ups he also shared some strategies for identifying talent gaps and why developing talent needs to be a key priority for venture firms.
Lorne Jacobson (Vice-Chairman and Co-Founder, Triwest Capital), and Whitney Rockley (Co-Founder and Managing Partner, McRock Capital) also participated in the discussion that was moderated by Chris Walker (Principal, Harbourvest) during the conference in Lake Louise.
Attracting Top Talent to Firms (& Portfolio Companies)
The panel began by looking at the development of Canadian venture capital firms and unpacked the plusses and minuses associated with more United States firms becoming active in Canada, increasing numbers of accelerators, international limited partnerships (LP) and initial coin offerings (ICO).
Jason commented that many venture capital firms are facing some of the same talent acquisition challenges as the portfolio companies they invest in. In spite of the volatile American political climate, once over the border, job-seeking U.S. emigrants often become deterred by higher income tax, lower wages (with the exchange rate), and in some provinces, foreign ownership tax.
For venture firms looking to recruit for their team--or for their portfolio companies--Canada offers an excellent start-up incubator environment. But the less-than-attractive economic reality for Americans moving north means that companies may hit hurdles in attracting the high-caliber talent required to scale. And as such, venture capital firms -- should consider offering other incentives (besides compensation) to attract U.S. candidates in a competitive talent market.
Building out Venture Capital Teams
The discussion shifted to examine how Canadian venture capital firms are creating value, and a differentiated offering to help attract entrepreneurs, who are becoming increasingly selective about entering into partnerships. It's no longer enough to bring cash to the table, and venture capitalists should focus on adding value by building out differentiated capabilities that will help their portfolio companies make the right connections, build their brand, and catalyze growth.
According to Jason, venture capital firms looking to appeal to savvy entrepreneurs should account for these roles and capabilities on their management teams:
- Network Connector for sales, customer feedback, and business development. A great VC network should include contacts in sales, customer service, business development, and channel partners.
- HR/Talent Resource to support talent acquisition and hiring. Venture capital firms help portfolio companies hire top talent, and need to be able to help companies attract the right engineers, designers, sales superstars, executives, and board members.
- Brand Creator to build the company and firm reputation. Good brand creation is about building a trusted, respected community around portfolio companies, which includes customer-relevant networks, advisors, talent, internal operations, and the overall brand.
- Technology Consultant. In addition to providing financial support, today's venture capital firms need to be able to counsel portfolio companies on data science, technology architecture, and design thinking.
- Leadership, Management, and Strategy Mentor. Top entrepreneurs are often great engineers, but often not yet great leaders. For this reason, venture capitalists should be prepared to serve in an advisory capacity to budding CEOs.
Cultivating a Stronger Employer Brand
In addition to building venture capital horsepower to appeal to prospective entrepreneurs, Jason also identified that this will help develop a stronger employer brand, to attract more of the right talent. At the venture capital level (or at the startup level) high-quality candidates will seek out the best companies to work for; those who have won workplace awards and have a strong reputation in the industry.
For some, salary may not be the most important incentive, and so it becomes critical for venture capital firms to design stronger mentorship programs, offer professional development and training opportunities and focus on lifestyle compensation to attract a more diverse pool of talent.
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