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When Does it Make Sense to use a Search Firm?

Advice from Techstars on when a search firm can help you hire.
Sep 26th, 2019  |  Techstars Talent
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There are plenty of circumstances that a startup will encounter where it makes sense to use a search firm: 

  • You have an important VP or C-Level opening and it’s going to be tough to fill. 

  • You are doing multiple jobs at once and you don’t have the bandwidth to proactively recruit and manage a candidate pipeline for this role. 

  • This role has very niche requirements and the pipeline that you’ve built isn’t meeting your expectations. 

  • You are spinning-up in a new geography and don’t have an established network.

These could all be good examples of when a search firm might be the best option for your company but there’s a pretty expensive price tag attached to using one, so how can you make sure it’s the right decision? 

In these instances - it’s important to decide which roles are actually worth the investment. Try thinking about it in the context of the role you are hiring for: if it’s a VP of Sales with OTE of $300,000 in their first year, and a search firm could take anywhere from 15 - 35% of the first year earnings for a role - you are looking at paying $ 45,000 - $105,000 on top of that salary just to close the position. However, think about the potential revenue that a good candidate in this role will generate over their first year, or the direct cost and potential lost revenue associated with hiring a bad candidate and then re-starting this search 3 months from now. If the opportunity-cost of using a search firm is less than the risk you might take by not using one - it’s a good time to consider it.  

That being said, there are a lot of recruiting agencies and search firms out there and some are better than others. You’ve likely heard horror stories from other founders about searches gone awry or those that dragged on for 8 months. For that reason, we scoured our portfolio and surveyed other VCs to find search firms that we trust and we know will provide high quality services to our portfolio. We picked  True Search and Hunt Club as our partners because we heard multiple success stories from portfolio companies who had worked with them in the past. They have a good understanding of the ecosystem and know what it’s like to work with startups that are rapidly advancing. We negotiated portfolio-wide discounts with both partners, if you’re interested in learning more about either partner you can contact talent@techstars.com

Understanding which search firm model is right for you: 

Techstars Talent
The Techstars Talent team is here to enable our portfolio companies to build, manage, and develop highly successful teams by offering them resources that give a competitive advantage when it comes to talent.
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