MaRS Library Startups: Build a strong management team and attract investors
Finding the right management team candidate
As you build your business and begin to bring in other employees and managers, you should consider a few key points about each candidate.
- Does the candidate fill the specific skills and experience requirements for the position?
- Does your candidate have passion about your idea and your business?
- Does the candidate demonstrate the strengths you need in the role and in your business?
- Do the candidate’s references confirm and support what you believed about the candidate through the interview process?
- Do you need the candidate on a full-time, ongoing basis, or will an interim resource suffice until you achieve the next major business milestone?
How do I hire great people without money to pay them?
Since you will not likely have much money to pay management team members prior to funding, you and your co-founders must rely on the following to recruit key members of the management team:
- your passion for your new business
- the potential appeal of being in on the ground floor of a new opportunity
- your personal network(s)
This may provide a significant challenge for a team that is comprised solely of academic, research or other largely technically-oriented teams. If you cannot attract a business resource to join your venture, you likely do not have a solid business model for your technology.
Commercialization advisory organizations like MaRS can assist you in meeting business resources who may be interested in working with you.
If you’re bootstrapping your startup or are new to entrepreneurial activities, you will likely need to focus on inexperienced, young resources with pure talent and a high level of energy and passion for your business.
It will be difficult to recruit well-known industry veterans until you have a track record and can meet their salary requirements.
Who fits well with your venture?
Bear in mind that the well-known industry veteran might not prove the best fit for your management team or your business if they have spent their career with a larger organization. Large organization skills do not always translate effectively into startups.
During the interview process, make sure to communicate how working at your company may differ from the candidate’s current work environment. You want to avoid recruiting a resource that may not stay in the role once they experience your environment first-hand. The ”big company” candidate may also not be capable of delivering the results required without the benefit of a larger organization behind them.
You can augment young and inexperienced management teams with one or more seasoned part-time executives, directors or advisors who can help add credibility to your startup with customers and partners.
This dynamic will also demonstrate to potential investors that you, the founder, are a strong evangelist with a compelling, innovative product or service, as these resources joined the team prior to the raising of significant capital.
Many individuals and organizations provide executive-level services (CEO, COO, CIO) to early-stage businesses. Entrepreneurs should use similar recruiting and interview process with these organizations as with other candidates to find the best match of skills and experience for the position. A number of these resources are willing to work for a combination of cash compensation and equity.
Do I need a board of directors at this stage?
Entrepreneurs may believe that they should wait until they have raised significant capital before forming a board of directors, but in reality good guidance always proves valuable at every stage of a company’s development.
Like management team candidates, keep in mind that board members from large organizations may not best suit a start-up’s needs. The presence of a board may also signal to potential investors your willingness as a founder to take and act upon the advice of others in your business.
Depending on the financial stability of your business, these senior resources may prefer to serve on an advisory board rather than in a formal director’s role with your venture.
The Canadian law firm, Fraser Milner Casgrain, offers a comprehensive overview of directors’ liabilities.
Kawasaki, G. (2004). The Art of the Start: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything. Toronto: Penguin Canada.