Start-ups channel VC funding towards tech recruitment

More than half (54%) of start-up businesses who have secured private equity or venture capital funding in the past 12 months invested capital in tech recruitment. This up from 37% of those who received their latest funding round between three and five years ago, prior to the Covid-19 pandemic.

According to Robert Half’s latest Demand for Tech Talent report, which combines data from a survey of 750 tech hiring managers with insights from the company’s specialist recruitment team, the increased focus on hiring comes as a response to the tight hiring market, which makes it harder to secure top talent.

With businesses who have completed a funding round in the past 12 months looking to make an average of 206 hires, it is no wonder demand for talent has reached unprecedented levels. As a result, the start-ups that raised capital are allocating around a quarter (23%) of that to hiring tech talent, up from the pre-pandemic average of 18%.

Craig Freedberg, regional director for technology at Robert Half, says, “Increasing headcount is crucial to being able to scale a business, but with start-ups looking to make mass hires after a funding round, adding to the existing demand in the market, it is becoming harder to secure skilled talent. Supply simply cannot keep up with demand, which is why businesses are investing more to find candidates and compete on salaries.”

In a market where tech talent is hard to find, and even harder to secure, start-ups are also investing more to upskill existing employees to plug gaps. Half of tech leaders reported that their business spent at least some capital from a recent funding round on upskilling and training their current teams so that talent shortages do not prevent the organisation from achieving its goals.

The pressure on growing businesses to bring in and develop the skills they need to succeed is clear. Aside from research and development, businesses that received funding in the past 12 months have been more likely to invest in people than in other more traditional areas of investment, such as mergers & acquisitions, marketing and business expansion.

How business size impacts tech recruitment

As start-ups scale-up, hiring priorities shift from “build” to “protect”. For small businesses, priority hires after a funding round are business intelligence (43%), leadership (41%) and dev-ops (35%) roles – all of which are crucial for finding direction, developing a strategic growth plan, and ensuring that the product is ready and able to handle rapid growth.

As they grow, the focus shifts. Large enterprises that received funding in the past five years were focused on data management – crucial for handling customer demand and protecting brand reputation. The most common hires amongst large businesses are information security (46%), cloud and infrastructure (44%) and business intelligence (43%).

With business intelligence and data analytics roles in high demand across businesses of all sizes, and critical to business growth and health, starting salaries in this area are currently the fastest growing in tech. Robert Half’s updated 2022 Salary Guide revealed that salaries have soared by 7.7% over the past six months as tech leaders compete for the best talent.

Freedberg added, “We work with businesses of all shapes and sizes, and their hiring priorities vary dramatically based on their ambitions for the future. While business intelligence and data roles are critical for identifying opportunities and threats wherever an organisation is on its journey, the demand for all tech roles is intense in today’s market.

“Everyone is playing the same game, and tech leaders need to think carefully about their strategy to ensure they have a competitive advantage when it comes to attracting and retaining great talent.”

ALSO READ: Local is king: Africa’s online platforms take on Silicon Valley