While not often discussed publicly, VCs are increasingly looking to poach talent from struggling startups. And there isn't anything wrong with it.

“We’re saving great people from mediocre companies”

Public market woes, down rounds, a decrease in unicorn births and a slowing venture financing market have combined to cast a pall over the startup market.

As a result, there is a veritable industry of thought leaders (mostly VCs and wantrepreneurs) writing thought pieces on how to survive the downturn.

Many VCs are telling their startups to raise more cash now in preparation for a tougher environment ahead. Most of the conversation and advice takes a defensive posture. 

venture capital winter

 

But not everyone is playing defense.

Some of them are not just helping fortify their portfolio companies but leaning into their winners.

And we know because of the types of queries that our customers are asking of the CB Insights platform. Often, the questions they ask of the platform help shine a light on industries that are hot or going to be hot.

Recently, the questions from the smart VCs have centered around how they can scale up the teams of these star portfolio companies aggressively.

And they’re doing it by poaching talented individuals and teams from struggling startups.

They’re following the advice of Baron Rothschild to buy when there is blood on the streets. Rothschild heeded this advice and made a fortune buying in the panic following the Battle of Waterloo against Napoleon.

venture capital bull market

 

The idea of blood on the streets and poaching talent from struggling startups will seem mercenary to some especially as it doesn’t seem “founder friendly”. In fact, the word “poach” rubs some folks the wrong way.  Given the negative view on ‘poaching’, venture funds understandably don’t talk about these activities very publicly.

But the reality is that finding weak or struggling startups and recruiting talent from them is something that top VCs do as part of their portfolio management and portfolio support efforts. They do it all the time, in fact (at least the good ones do). In the current downturn, many are just intensifying their efforts. 

And the reality is that it is smart, rational.

Perhaps most importantly, these activities are actually valuable for portfolio companies. If you are a startup founder who plans to grow into this downturn, you want your VC leaving no stone unturned in helping you recruit talent.

 

Poaching talent for your portfolio companies using CB Insights

With the addition of technology stack (herein “tech stack”) data to CB Insights search, now you can identify struggling startups and quickly assess their fit with your best portfolio companies by understanding the programming languages, frameworks and more.

Here is how.

 

If you wanted to poach engineering talent from companies, you might set the following filters on Company Search to start:

  1. Companies that have not raised funding in the last 18 months
  2. Those with low Mosaic scores (our National Science Foundation-backed private company health rating)

With this, you have this list of startups in seconds.  

Now, you can also filter that large list of companies using their tech stack information.

Let’s say the portfolio company you are trying to help is looking for engineers who know Golang (Go) and Python.  Here’s how you can do all of that in 24 seconds.

 

Step 1 – In the Search menu, scroll down and select “Company Search,” which includes a variety of filters to help you identify the right startups.

 

Company Search

Step 2 – Identity the right startups.   First, go to the “Company Attributes” filter section and type in “Go” and “Python” in Tech Stack.

 

Go and Python

 

 

Then, use “Financing and Exits” to filter for startups that have not raised funds in the last 18 months.

 No Funding in last 18 months

 

 

Company Mosaic, which measures the overall health and growth potential of private companies using a variety of non-traditional signals (customer/partner signings, hiring, website traffic, media sentiment, etc) can also help you further hone in on companies that might be struggling.

Filtering this list by those with a low Company Mosaic score helps highlight the weakest companies of the group. We’ll filter by Mosaic score in the bottom quartile.

 

Button Tier Mosaic scores

 

 

Step 3 – Click “See Results” and view the startups that match your needs. It’s that simple. Check out the results here.

In seconds, you’ve narrowed down the list of startups that have Go and Python programmers. You can target specific people within a startup by clicking on contacts to reveal names of the people at each startup.

Tech Stack Search - reveal contact

 

Since rolling out Tech Stack into search just a couple of weeks ago, we’re seeing VCs increasingly using it as an additional filter to identify relevant talent for their portfolio companies.

If you are a customer on the Insights plan or higher, login and get started. If not a customer, what are you waiting for? Sign up for a free trial.