- Europe’s startups are hiring faster as they attract record levels of funding.
- Recruiters told us the competition and COVID-19 means the power lies with candidates.
- Remote and hybrid work are now front and center of candidates’ minds.
The confluence of COVID-19 and record levels of VC investments has led to a race for tech talent in Europe, as cash-rich startups negotiate with candidates who want perks like remote work.
“The talent wars are hotter than ever,” Ruth Foxe-Blader, a partner at VC fund Anthemis told Insider. “The market is extremely competitive because of the compressed deal time and large rounds we’re seeing.”
2021 is a record year for European funding already, with startups raising $65 billion already, up from 2020’s $46 billion total, per Dealroom data.
Startups, with more cash at their disposal, are now competing with each other to find executives who are capable of turning them into global businesses.
Simultaneously, the pandemic has changed the traditional perks and benefits system employed by companies.
That’s meant that in-demand executives and tech workers can command higher salaries, while negotiating new types of benefit, such as remote work. Gone are the ping pong tables and free lunches — candidates are negotiating hard on flexibility.
“As fundraisings have increased in size, so too has compensation,” said Caroline Lo, partner at London-based recruiter TrueSearch.
“No position is easy to fill in growth-stage businesses but the explosion of tech startups and money coming in far outstrips supply so it’s hard to find anyone in these functions.”
The number of tech jobs has increased. A tenth of job vacancies in the UK are in tech and the number of vacancies grew 2.6% each month from July last year after an initial COVID-19 related dip, according to Tech Nation.
Still, one plus side of the pandemic and the popularity of remote work is greater flexibility as to where talent is located. Foreign talent who may never have considered a career in Europe now have that option.
“We’ve expanded our search internationally,” said Patrick Anderson, principal at London search firm.
“There has been a shift in attitude with people becoming more comfortable with remote working. Interestingly, candidates are offering up information about their circumstances, be it family needs or location, far earlier in the process than before as it’s now more socially acceptable to do so.”
Growing up fast
A fascinating side effect of Europe’s startups being engorged by capital is that growth expectations have changed as round sizes have increased.
Previously a Series A-stage company might look to bring in team members who can help grow the company from, say, 10 to 50 people. But now having a chief financial officer — usually a role filled at Series C or later — is now increasingly common for earlier-stage businesses, particularly in fintech.
It’s understandable that
might need more such a specialized role at an earlier stage. Despite being a broad church, the nature of regulation and compliance in the industry makes an executive hire at a comparatively early stage more plausible.
But the uptick in demand doesn’t necessarily match availability, which is making recruiters think more creatively.
John Watkins, partner at Altima, a firm which specialises in placing tech CFOs, told Insider than supply and demand were “completely out of kilter.”
“We’ve become slightly more inventive about how we think about CFOs,” he said.
“We’ve started taking people straight out of banks, not just accountants, and that means we have to be very diligent about how we build out that team, where we perhaps partner someone with a more senior director of finance to get a better team composition.”
Watkins added that despite some initial hesitation, many founders were now more onboard with the idea that a chief financial officer no longer needs to be a Chartered Accountant, as was the case 10 years ago. The result is that companies are getting a different type of CFO but one that is perhaps more suited to an earlier stage, often more dynamic role.
It’s nonetheless an investment. Watkins said he empathized with founders who could end up offering salaries ranging from £100,000 to north of £200,000 ($138,000 and $276,000) and around 1% of equity, as early as Series A.
It’s not just CFO roles that are changing with the times.
Insider previously spoke to the VC fund Northzone’s new non-investment partner Elena Pantazi on the need to bring in talent acquisition teams, and a relatively new role in the form of chief of staff.
With hybrid working practices set to stay, it’s become more imperative to make hires who focus on company culture. “We’re seeing a pattern of companies hiring a head of HR earlier in a startup’s journey, for example,” said Lo. That has a knock-on effect for other roles, with roles like chief people officer and more experienced COOs and CMOs becoming both more commonplace and competitive.
Despite the heightened competition, there’s pressure from the venture backers whose cash is being spent by startups.
“Serious investors are expecting that you are going to use their capital to de-risk their investment,” Foxe-Blader said. “They are expecting top talent and want you to deploy capital to get the best talent you can find on the market.”