Five Hiring Red Flags VCs Need To Watch Out For

Martyn Bassett Associates is a successful recruiting firm that has worked with thousands of Founders and CEOs to help them make strategic hires across Product, Design, Marketing, and Sales. 

In fact, 80% of our clients are seed or Series A-funded tech startups. These companies typically have fewer than 50 employees and revenues under $8M ARR; sometimes, the product is still a working MVP. 

Our experience working with all different types of Founders has given us unique insights into how they make critical hiring decisions, for better or worse. 

Many Founders are great at team building, while others can flounder under pressure. Here are the five red flags VCs should look out for when it comes to how their Founders are making hiring decisions:

1. Their Founder is insecure

This leaves them unable to hire more experienced talent as they feel threatened. They look for reasons not to hire vs. reasons to hire. This can lead to a lack of experienced talent on the team, which can hinder the growth and success of the company.

2. Their Founder has anxiety

They are unable to make a decision and can often fall into analysis paralysis. They will often not welcome outside opinions and even ignore expert advice. Additionally, they may suffer from interview fatigue, leading to poor hiring decisions.

3. They have Founder-itis

Founders can be overly critical of potential hires and believe no one is good enough for their company. This lack of humility, inappropriate for their stage and level of experience, can lead to missed opportunities for top talent. After all, who wants to work with a know-it-all?

4. They live in a fantasy

Founders may want a hire who only exists in their dreams, believing in "unicorn hires." They may be prepared to wait instead of waking up from their dream and hiring someone to start scaling. This wait time often results in missed market opportunities and a lack of progress in building the team and product.

5. They're vibing

Founders may prioritize 'culture' over skills and abilities, leading to a homogeneous team and a lack of diversity. They may also hire people "just like them," leading to resistance to change and missed growth opportunities.

It's important to point out that plenty of Founders make great decisions and build teams that go on to build great companies. We've worked with plenty of those leaders.

However, understanding these common hiring red flags can help VCs better support their Founders and step in, if needed, to ensure the success of their investments.

Even though seed and Series A companies can be full of turbulence, a Founder’s hunger and passion for their business is why we love to work with Series A startups.

Don't let a bad hire derail your investment. Here are strategies you can use to avoid this costly mistake.