Breaking the mould: the search for fresh talent .
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Overview
DATE
04 Mar 2024
AUTHOR
Stuart Thompson
IP Exec was launched in 2006 as an in-house search capability. Why was this necessary, how do they work and who do they look for? While the market has traditionally prized grey-haired experience, increasing leadership diversity has become a pressing need even for early-stage companies, particularly those seeking US funding. Instead of ticking boxes, a fundamental rethink is required.
Propelling an idea to commercial success is a rare skill – successful entrepreneurs aren’t famous by accident. The importance of talent is now widely acknowledged by investors and is precisely why IP Group set up its own in-house search capability and talent resource (IP Exec) in 2006. Over time, greater recognition of the importance of more diverse leadership has increased demand for a broader pool of potential candidates, making IP Exec busier than ever.
Failure is expensive
Even with just 42 portfolio companies in 2006, cutting fees paid to external search firms made economic sense. What’s more, “few UK head-hunters had much early-stage experience,” Stuart Thompson, IP Group’s Talent Partner and Head of IP Exec, says. This could be problematic, given the fragility of young companies.
“You need to understand the challenges they face and their very limited resources,” says Cassie Doherty, Investment Director at Parkwalk, the Group’s EIS fund management business.
Hiring badly can make the difference between failure and success.
Stuart Thompson
Talent Partner and Head of IP Exec
Hiring badly can make the difference between failure and success, says Stuart, and failure is “extremely expensive.” If a start-up has hired the wrong person, “you’re often choosing between turning off the lights altogether or writing another cheque with your fingers crossed.”
Seeking rare species
Working alongside the Group’s investment team gives Stuart a thorough understanding of each portfolio company. “I’m able to follow the story and all its twists and turns, so I can be proactive,” he says. “When I’m meeting people, I’m thinking if they’re a good fit for a certain company before it’s even asked for help.”
The search is constant, he says, because early-stage chairs/NEDs are an unusual breed. “They live for this stuff, they’re excited by the technology, and they’ve a passion for building businesses,” Stuart says. “It’s risky – nobody’s heard of the company and almost none of its money will go to the candidate,” he continues: “Yet you’re leveraging their experience, their reputation – you have to look hard for those rare individuals who’ll say yes.”
Valuing new skills
What’s more, every start-up is unique, with unique requirements. Take Quantum Dice, for example, which can generate genuinely random numbers that provide next-generation digital security. Its CEO wanted to look beyond the standard profile to find a chair who would bring different experience and skills.
Having spent decades in the semi-conductor industry, Janet Collyer “brought both industry knowledge and a very credible understanding of selling to major players,” says Stuart. Janet was intrigued: “During my career, I’ve dealt with the business consequences when software or data that relies on key-based cryptography to protect it is compromised by a security failure, so I wanted to find out if their technology was as good as they claimed.”
It’s a small board so you do need to carry a bag somewhat. For example, we’re raising funds right now, so I’m meeting investors and introducing new prospects.
Janet Collyer
Chair at Quantum Dice
As with many start-up companies, Janet’s position involves a wide range of roles. “It’s a small board so you do need to carry a bag somewhat. For example, we’re raising funds right now, so I’m meeting investors and introducing new prospects – I’m also there to mentor the CEO and stretch him, which is a role I’ve always enjoyed.”
Almost two years after she became Chair, she remains impressed: “The team are very bright, competitive and energetic,” she says. “Crucially, the technology works.”
Avoiding the obvious
Constantly relying upon the same profile inevitably perpetuates a predictable cycle. “Many head-hunters show us candidates who are all at a particular age, with a very similar career pathway,” says Cassie: “They’re good, but you don’t want them filling your whole board, especially if you’ve got a really innovative technology and you want to be different.”
Worse still, when trying to expand the field, she says: “I often hear: ‘You don’t get people like that in this space’.” Such myopia makes no sense, argues one portfolio company Chair: “I don’t care about political correctness, but I’m convinced that greater diversity brings better results. With diversity around the table, somebody will think of a possible solution where everybody else is stumped.”
Listening to investors
Extensive research has confirmed the commercial benefit of greater diversity; it’s now firmly on the radar of investors scrutinising new opportunities, especially in North America. Diversifying their leadership is, therefore, no longer optional for many UK start-ups. This is particularly true for technology and life-science companies, which often prefer to list in the US. “You can’t avoid it,” says Stuart: “If you’re seeking to build your footprint in the US and your board is entirely pale, male and stale, what chance have you got of convincing US investors to take you seriously?”
But how best can young companies satisfy potential investors who want the reassurance brought by those with the traditional track record, while also ensuring a diversity of experience and opinion within the board?
Building in diversity
IP Exec favours grabbing the challenge with both hands. “Forget box-ticking – companies have to grip diversity in its truest and broadest sense,” says Stuart. “We need to take a step back and look at a board over a period of time and how it’s likely to evolve so we can think about how we build in diversity from the earliest stage.”
To this end, Stuart’s actively working to expand his network beyond “the market’s baked-in ideas about what ‘good’ looks like”. As Quantum Dice appreciated, that profile isn’t always the best fit. “Stuart didn’t compromise on quality – I was put through the wringer just like everybody else,” says Janet: “But he persevered on finding a diverse candidate pool – he wanted to present a balanced list.”
Creating winning teams
Ultimately, early-stage companies are running a race – for funding, relevance and, ultimately, market dominance. Winning requires the right leadership. “You can have the best technology in the world,” says Cassie: “Without the right team to deliver on it, however, it’s never going to go anywhere.”
You can have the best technology in the world. Without the right team to deliver on it, however, it’s never going to go anywhere.
Cassie Doherty
Investment Director at Parkwalk
Building the best team for each early-stage asset requires a thorough knowledge of each company, its story and potential. It also needs access to the largest-possible pool of talent, which means welcoming relevant skills and experience in every form. Embracing diversity makes a young tech company more attractive to investors and, ultimately, more likely to succeed. There are few no-brainers in venture capital – this is one of them.
