‘Less Glamorous’ Startups May Offer Stability More Than Riches
Though IPO-bound startups tend to get the most attention, smaller companies whose eyes are on building businesses for the long term offer job options for tech professionals, as well.
Venture capital investment in this year’s first quarter hit its highest level since 2001, reaching $23.87 billion. Another $13 billion was invested during Q2. That funding isn’t all going to big-name startups in Silicon Valley. While it’s true California companies dominate the startup scene, young companies are raising cash across the country.
Consider these recent deals:
- Orlando, Fla., mobile-software company Kony raised $50 million.
- Redmond, Wash. satellite communications startup Kymeta Corp. raised $50 million.
- Chicago-based PowerReviews, which creates software to run consumer reviews of products and brands, raised $35 million.
- Vidyo, of Hackensack, N.J., received $20 million in funds for its videoconferencing solutions.
- Portland, Ore.-based Jama Software, which offers business requirements-management solutions, raised $13 million.
- Marketing automation firm Balihoo of Boise, Idaho, raised $5 million.
How much of this money will lead to new jobs? It’s hard to say. But it’s worth noting that 73 percent of respondents to a survey by the Private Equity Growth Capital Council said their portfolio companies are hiring.
The Sweet Spot?
“The best entrepreneurs, the ones who often build the best companies that last, do not focus their energies on exits,” says Jay Bigelow, director of entrepreneurship at the Council for Entrepreneurial Development in Durham, N.C. “They keep the whole team focused on growing the business, making it more and more valuable, and when they do so, many options will become available to them over time.”
As such companies gain traction they’re able to obtain more funding, which gives them added stability and more resources for hiring. They’re able to build out from the core skills the founders brought to the table, and look to add depth and breadth to their technical skills, Bigelow says. In their quest to increase revenue, they also add business development and marketing staff.
Of course, as startups grow, maintaining their excitement and collaborative culture can be difficult. While every employee was involved in decisions at Jama Software, for instance, the company couldn’t fit everyone in the same room once it grew beyond 25 people, thus hampering such an open approach. (Jama now employs 120 and expects to keep growing during 2014.) Still, the companies “that are successful create a ‘we are all in this together’ mindset,” Bigelow notes.
Also, with age can come conservatism: As a company gets older, it may be less willing to take risk, its power structure might become more layered and less transparent, and new employees may remain more or less strangers.
That can be a turn-off for some talent, notes Chris Wood, managing partner at Kansas City-area staffing firm Paige Technologies. He’s seen some area startups attract top talent when they were working on something cool, but lose employees when they were bought out by major tech players.
Indeed, Wood says, a potential acquisition can be a turn off for many developers. All things being equal, they’re attracted to companies who’ll value their opinions and give them exciting work to do.
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