Dear Startup Investor,
A couple weeks ago, we told you about how startups are creatively filling in the gaps left by employment freezes and The Fed’s desire to increase unemployment.
These solutions are a great way to provide work opportunities for those who find themselves on the outside looking in.
However, the aforementioned hiring freezes also have a different impact on the startup landscape…
That’s because, while the world of technology is battening the hatches in preparation for the lean economic landscape that lies ahead, the top talent those companies would have otherwise attracted needs to go somewhere.
As it turns out, that somewhere is, increasingly, late-stage startups.
Consider that, in 2022, tech companies have laid off more than 13,000 employees. That’s not even taking into account the candidates who would have been applying to new roles.
In effect, we’re looking at a highly-skilled workforce suddenly in need of opportunities that will value those skills. In lieu of the usual suspects, startups offer a combination of opportunity and intrigue that is unmatched elsewhere.
“These companies have continued to hire strategically and are now able to take advantage of a softening tech hiring market to make key hires that were nearly impossible this time last year (when the pandemic drove up demand for tech workers),” Andiamo CEO Patrick McAdams told Reuters.
In a survey of more than 500 startup executives, over 40% have increased their hiring in the first half of 2022.
Of course, it’s important to reemphasize the term “late-stage startups” in this conversation.
These companies, many of which already have viable products on the market, aren’t as hamstrung by the current macroeconomic landscape. On the flipside, an early-stage company has to be far more careful with its use of funds, and a drastic expansion of its workforce might not be feasible.
Also, these jobs at startups often come with attractive perks and options that the larger corporations may not be able to match. The opportunity to be involved with key decision-making processes is in stark contrast to the hyper-hierarchical corporate structures in place at larger firms.
So, the attraction of top talent that would have otherwise flocked toward the Googles, Apples, Metas, and Teslas of the world will only further boost the prospects of companies on the precipice of etching their own name alongside the incumbents.
Of course, it will also afford these companies the ability to take one step closer to providing life-changing returns to early investors.
And that’s something we can get behind any day.