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VC Firms Looking for a Few Good EEs

The debate about available engineering talent, particularly in the US, ebbs and flows depending on a number of factors: the job market, engineering grads, and, of course, competition in the marketplace. Now it appears there's a new source of concern for companies that are trying to recruit innovative engineers: venture capital firms.

An article that appeared in the July edition of the Dow Jones Private Equity Analyst newsletter (and re-published in The Wall Street Journal) reports that venture capital firms are the latest organizations recruiting tech talent. This is a major shift from the typical involvement of a VC firm.

Usually, when a VC invests in a startup, the firm, or some of the investors, negotiates positions on the company's board of directors and/or in the management ranks. The company has already been founded by some innovative entrepreneurs. Now, it seems, VCs are moving up the food chain and are hiring would-be founders themselves.

Here's how the Dow Jones newsletter describes the situation:

    While venture firms have always helped start-ups fill executive and board member positions, they haven’t typically sourced engineers to build product. This more specialized recruiting skill, at least historically, has been the role of founders and their first few hires. But thanks to increasing access to early-stage capital and the decreasing costs of starting a company, many would-be engineering hires are now newly minted founders. They’re competing with other founders for engineering talent and creating one of the tightest start-up job markets in recent history. Compounding the situation, large tech companies like Google Inc. and Facebook Inc. are tossing big salaries at the engineering talent pool.

I haven't looked at engineering graduate and hiring statistics in a while, and I'd like to hear from readers: Is your company trying to recruit engineers? Even in the purchasing and distribution communities, engineering is taking on an increasingly important role because of the lifecycle management challenges of designing and purchasing components. It sounds like it's a really good time to have that EE.

14 comments on “VC Firms Looking for a Few Good EEs

  1. Nemos
    July 15, 2011

    Compounding the situation , large tech companies like Google Inc. and Facebook Inc. are tossing big salaries at the engineering talent pool.”

    The Dow Jones newsletter wrote ” big salaries” but this in not very clear.  And I don't understand why this “compounding the situation”. Moreover, the word “tossing” is not a good choice to describe a working relationship.

  2. Anand
    July 16, 2011

    “Now, it seems, VCs are moving up the food chain and are hiring would-be founders themselves”

    @Barbara,

      Why are VC's hiring themselves rather than just fund the ideas ? I feel this trend will scareaway startups from approaching VC's because these VC's can always copy the ideas and implement it themselves.

  3. t.alex
    July 17, 2011

    anandvy, Quite true. What makes the VCs do that? And what's more, is it necessary the founder an engineering talent?

  4. eemom
    July 17, 2011

    I agree.  Why would VCs hire engineers themselves.  What assurance do they have that the ones they hire will come up with a winning idea?  Unless they are hiring ones that are looking for capital themselves so rather than investing they are seeking ownership, this doesn't make sense.  Even if they are seeking ownership, how many companies can they themselves own and monitor.

    This is a confusing model and would for sure hinder other start ups.

     

  5. t.alex
    July 18, 2011

    Perhaps this is not really a trend among VCs. Only a few adopt this model?

  6. mfbertozzi
    July 18, 2011

    Once arrived financial crisis, VCs have started to pay more and more attention to investments done especially in the sense of return of. At “bubble” time, VCs focus was quite limited to financial indicators just to monitor how things were going on, but right now to assure investment's success, they have changed strategy, really going through internal processes which rules the company at the stage of seeds or start-up. As consequence, imo,  it came the need to extend the hiring footprint, moving from economic area to engineering area.

  7. Daniel
    July 18, 2011

    Adding technically talented peoples with VC is always good. Most of the startup companies are approaching VC with some sort of project details and feasible study reports. Before funding, VC’s has to make sure about such industrial growth and scope of such industries from different angle. Most of the VC’s has outsourced such case studies to technical consultancy, which is an added cost for them. IF VC’s are recruiting techies to their team, these techies can conduct such technical evaluation study, which are more reliable and trusted way.

  8. FLYINGSCOT
    July 18, 2011

    In Europe I have not seen many VC firms buying up engineering talent.  I can imagine the VC might look on this as a means of maximizing their chance of success by applying their own trusted resource to the acquisition's toughest problems (like a consultancy role).  It could also mean that VCs simply want to use their cash to go it alone when no decent acquisition targets are available (like moving up the food chain).  It seems like a reasonable plan provided the VC is flushed with cash.

  9. jbond
    July 18, 2011

    This is an interesting article that shed light on a subject I wasn't aware of. It seems very odd that VC's are hiring engineers, but it makes some sense since they have money riding on the final outcome. I wonder how well their hiring is going. I know of some major companies around us, like Dow Chemical, Dow Corning and General Motors to name a few who are having trouble finding and hiring qualified engineers.  Are these VC's seeking out engineers based on their qualifications and trying to steal them away? Or are they getting engineers right out of the job pool?

  10. eemom
    July 18, 2011

    It would make sense if VCs are hiring engineers to help them sort through technical data and ensure they are making sound investment decisions.  With that being said, they would need to hire seasoned engineers who's opinions they can trust and count on. 

  11. HM
    July 18, 2011

    Companies are hiring now. And they are too choosy about profile and specific about depth and breadth of candidate's knowledge. Indeed good time for EEs

  12. ese002
    July 19, 2011

    But thanks to increasing access to early-stage capital and the decreasing costs of starting a company, many would-be engineering hires are now newly minted founders.

    “Decreasing costs of starting a company?”  NRE for ASICs have reversed course?  Competive circuit boards and systems are cheaper to develop?  No?

    For the currently favored form of Internet startup, this article actually make some sense.  Put together a nearly pre-fab web service, host it on Amazon, and be operational with customers in a matter of months rather than years.  These kinds of companies don't need much R&D but they need it done quickly.  The time required to staff up can be an issue.  If the VC can provide the hands they can get their return that much quicker (or abort and redirect quicker, it is still less time to money).

    It sounds like it's a really good time to have that EE.

    Maybe not.  These kinds of startups don't hire many people and seldom need EE's at all.

     

  13. hwong
    July 21, 2011

    I would like to understand the basis of the claim from the paper. I haven't seen any VCs looking for talents at that kind of level. How should a potential candidate expose their talents? What kind of forums are there?  Is there really a need on such ? I'd be interested to hear real life stories

  14. prabhakar_deosthali
    July 31, 2011

    For VCs to reduce their risks in the investment in the technology startups, it is a good idea to have some good EEs who are better postioned to see the potenitial business value of the technology companies.

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