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An Investment Team’s True X-Factor: Can You Spot Talent That “Gets” Talent? – September 2018

As the leading reviewers of venture capital funds, one of the topics we delve into in our due diligence is how investment teams assess the management of potential investee companies. Some, of course, have a more sophisticated and thoughtful approach than others. What is remarked upon and explored less often, however, is how investment teams evaluate how management teams assess talent. By examining the principles that underpin how the management team hopes to build their core personnel, it is possible to take a view on the kinds of individuals the firm will attract and the culture they will build, together.

When early-stage businesses take on venture capital, the ambition is clear: rapid growth. In order to deliver growth and to support increased activity, most firms will need to hire more staff. However, hiring the right person is hard: armed only with a resume, a cover letter, and an hour or two in someone’s company, it can be easy to hire only those people with whom one feels most naturally comfortable, further perpetuating the problem of interviewers hiring people who resemble themselves, impacting diversity and encouraging groupthink. Do interviewers have a clear set of guidelines to follow, to help them make better decisions when trying to hire the right people for the business? Netflix’s famous “culture deck” was created as a response to being more open and honest in terms of the type of ethos that the firm was trying to create (“more of a sports team than a family”) and to look for those personalities that would add to this effort, while Google focus simply on two traits that they deem the best predictors of success within their firm: persistence and curiosity.

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Joanne Job

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Lauren Radford

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