Scale-up series part 3: Build a force-multiplying team

Startup success is largely determined by the strength of the team. Yet early-stage companies often approach initial hiring decisions without a long-term vision for how and why a co-founder, employee, or advisor will be additive. The right person with the right skill set can have a profound impact on the company, including, but not limited to, increasing efficiency, reaching milestones faster, reducing the need for additional hires, and mitigating risk for investors. The wrong person can have the opposite effect as well as create a time-consuming distraction for founders and teams.

Hire industry experts

In the alternative protein sector, startups are often founded and staffed by scientists. That may be adequate while startups are still in the lab, but it can quickly become problematic. It’s prudent to bring on someone with business acumen as part of the initial team. Whether it’s a consultant, part-time employee, or full-time employee, someone should be looking at decisions with an eye towards product-market fit, target market, unit economics, and scalability. It’s ideal if that person has a background in traditional food and beverage (F&B), or similar bioeconomy sectors.

The F&B industry has its own complexities, idiosyncrasies, standards, and pitfalls. It’s never too early to begin learning what they are and how to navigate them. It’s critical to demonstrate a clear understanding of F&B when engaging with large corporates, for example, to avoid losing credibility and interest. Hiring F&B manufacturing generalists may be sufficient for the early term, but as startups deal with the hard realities of scaling in F&B, they will need increasingly specialised experts with direct experience addressing the specific challenges of large consumer brands.

“While hiring the right people for your team involves a degree of gut feeling, as personal chemistry is also important, it’s quite an analytical and systematic process. It starts with your strategy: where do you want to be in 3-5 years, what competencies do you need to get there, and what criteria should you use for CV screening, job interviews, and work tests to ensure you hire the person who will help you achieve your goals? Setting up a systematic hiring process requires some effort, but the time spent on it will be worth it compared to how much time you’ll lose if you hire the wrong person.”

Pia Voltz, Founder & CEO, Tälist

Plan the team rather than letting it evolve organically

There are strategic hires and there are convenient hires. Don’t settle for someone who isn’t the right fit just to check a box. Don’t believe that having a larger team impresses investors. And don’t fall into the trap of asking someone to join a team just because they are willing and able. For example, hiring an experienced marketing expert who is talented, passionate about joining the team, and relatively inexpensive might seem like a no-brainer. But if the company is nowhere near needing marketing guidance, the hire is ill-advised regardless of the circumstances.

Hiring without a strong strategy can result in staff churn, which wastes time and money. Research suggests that employee turnover can cost employers 33% of an employee’s annual salary.

 Before taking on any search, ask the following questions:

• Is it critical to fill this role?
• Could/should an intern, advisor, or consultant do this job?
• What are we prepared to offer the new employee (beyond financial compensation)?
• Do we have a plan for whether employees will receive equity? Can that plan stand up to investor scrutiny, significant future growth, and an expanding team?
• Have we defined the culture we are trying to build?
• Can our IP be protected if the employee leaves?
• Do we know how to identify people with startup mentality and drive?

A startup’s employees are as important to its longevity as its partners and customers. Hire carefully and nurture employee development.

“One of the common hiring mistakes we see employers make is focusing too heavily on immediate qualifications and not enough on general aptitude. While having the relevant experience to perform the role is of course important, often more important in long-term hires is the candidate’s potential for growth, adaptability, and general ability to ‘figure things out’, which can be far more valuable in the rapidly evolving alternative protein industry”.

Noga Golan, Founder & CEO,  Alt Protein Partners

Create a board strategy

A board of directors is a formal governing body of a company, helping to determine strategy, oversee management, and protect the interests of shareholders and stakeholders. While public companies must have boards, private companies often choose to appoint a board of directors. Members of the board of directors are compensated for their participation. The amount and format of compensation varies widely, but it is more significant than advisory board compensation.

An advisory board is an informal group of subject matter experts who fill knowledge gaps and/or provide access to broad networks. Advisors can add credibility to a small team and help drive the company’s direction and decision-making. Members of the advisory board for startups are typically compensated with a small percentage of equity (0.5-1%) or a flat hourly fee. Many early-stage companies opt to appoint an advisory board long before they create a board of directors, primarily because of compensation constraints. While delaying the creation of a board of directors is common, startups should always appoint an advisory board soon after the company’s formation. Advisory board members should fill a specific need, be willing to commit their time, and add real value to the company (not just make a pitch deck look better). Advisors are a great way to access high-quality and experienced experts and insiders well before startups have the financial resources to hire such people full-time.

Be prepared to manage departures

Someone on your team will inevitably prove to be a poor fit for your company. When this happens, you will need a plan for parting ways. To prepare for this possibility, consult a human resources expert or lawyer as soon as you begin building your team. Separations can be costly, drive morale down, and create reputational risk. Understand the legal rights of all parties involved and identify a process for deft management of terminations and resignations.

Exercise caution when choosing a co-founder

It is imperative for founders to question their assumptions about who and what they need for ongoing success at the earliest stages of team formation. This is especially true when selecting a co-founder. While it may be tempting to tap a current/former colleague, respected industry insider, or even a friend for the role, the question is whether that person brings complementary expertise. Do they fill a knowledge gap? Can they provide something the founder can’t? The company will not need two CEOs, CSOs, CTOs, etc. Nor will the company likely benefit from “Co-CxO” when it’s time to raise.

If a founder is successful in finding a co-founder, the first order of business should be a legally binding founders’ agreement. This can be awkward when a company is barely out of ideation. It can feel like overkill when two founders are still in the honeymoon stage of forming a venture. Under no circumstances, however, should the founders’ agreement be delayed or dismissed. This document is the key to avoiding needless conflict, time, and litigation if founders part ways. Founders’ agreements should cover the following critical areas:

• Roles & Responsibilities: Define titles and who is responsible for what
• Rights & Rewards: Describe decision-making rights and rewards, such as who sits on the board
• Commitments: List assets such as IP, network, capital, and time each co-founder invests
• Contingencies: Determine vesting

Note that it is important to approach equity discussions head-on. There is no one-size-fits-all answer, but a 50/50 allocation is often not the right ratio. The most important aspect of the equity decision is to determine the split early and be able to articulate the rationale to investors.

“Building a startup team is like a strong marriage – built on trust and deep understanding. Choose people you know well, acknowledge each other’s strengths and weaknesses upfront, and regularly check in on life stages, commitment levels and suitability for the role and company stage. This ensures resilience and alignment in facing startup challenges together.”

Floor Buitelaar, Managing Partner, Bright Green Partners

Investing the time, effort, and strategic planning required to build a force-multiplying team is one of the most effective ways to position a company for success. A rock-solid team can be a startup’s superpower!

Hiring resources

If you want to learn more about hiring the right team for your startup, check out the resources below:

• Alt Protein Careers Board
• AltProtein jobs powered by Tälist
• Vevolution
• GFI’s Collaborative research directory
• GFI Talent Directory (Companies can request access to the talent database here.) 
• GFI aggregates job openings from alternative protein companies on our website.
• GFI’s Student Guide to Navigating the Alternative Protein Space has a section on starting your career in alternative proteins.

If you are interested in starting an alternative protein startup, there are many helpful tools on GFI’s Entrepreneurship webpage.

This is part three in our new Scale-Up series. You may also be interested in part one, exploring key principles for start-ups looking to scale, and part two exploring how to find the right target market.