[Matrix Moments] Why human capital plays an important role - in startups and VC firms
The role human capital plays in startups is well known.
But Rajinder Balaraman, Director, Matrix Partners India, and Debleena Das, Vice President, Human Capital, Matrix Partners India, believe that human capital plays an important role in the VC ecosystem as well.
Rajinder said, “I think there are a lot of similarities between venture capital and human capital. But let’s take a step back. I think the startup and VC ecosystems have changed significantly since five years ago. Five years ago, there was a lot of capital available for innovative founders and ideas, but talent was scarce.”
He said now we’re in an environment where capital is freely and abundantly available along with a much larger bench of experienced talent. This means what differentiates companies is the speed of execution of founders.
If you want to be one of those companies that scales really fast then you need to build teams that scale. This is obviously one of the qualities VCs look for in founders when they evaluate their work, companies, and consider partnering with them.
They also ask themselves whether the founders in question can truly attract smart and capable people to work for them.
“This isn’t easy; I’m not going to lie. I think this is exactly why we built the capability within Matrix because getting high quality talent, getting these rock stars to join a young company can be very challenging given the options that they have. But if you can do it, then frankly it can be game-changing for a startup,” Rajinder said.
The market today is competitive and “rock star performers” want to work with other rock stars.
How do they judge whether the company has great people? They not only connect with the founder, but also with the rest of the organisation. This makes it imperative for everyone in the company to build and augment their brand as well.
“Get everyone in your company to build their brand. It has to be consistent with what the company stands for but with enough of a distinct point of view to be able to attract other rock stars. Also, invest in training and onboarding. Generally, people leave training to the manager, and I personally don’t believe that model works. I think you need to get the entire leadership team involved in onboarding new folks.”
Invest in training
Rajinder said there shouldn’t be any formal training without senior leaders of the firm being involved and investing their time.
“Who the rock stars meet in the first few weeks really changes how they integrate and perform. And when a rock star joins and sees that the senior leaders of the company are actually committed to their success, they’re going to go tell 20 friends that this company is really committed to building a high-quality organisation,” he said
Sharing her experience, Debleena gave the example of Camp K12, the online edtech platform that helps teach youngsters coding.
“It was a growth-stage startup in the pre-COVID era. Suddenly, post COVID, everybody wanted to go into edtech,” Debleena said. She added that finding someone who is super talented and as passionate about the idea as the founder is really tough and challenging.
“How we solved that problem is that we naturally built a strong network and relationships in the ecosystem. The candidate who we hired was actually someone who was in touch with us for a long time. We nurtured the relationship over time without any kind of particular opportunity. When this opportunity arrived, after multiple discussions with us, our team, and the founders, he got more excited about the idea of Camp K12 and their vision.
“Having a strong inbound network in the funnel and matching a rock star to the right company that truly excited them really worked here,” Debleena said.