As startup founders know all too well, attracting employees is a key challenge facing young companies. “The high risk of failure in the startup world makes job seekers reluctant to take a chance on early-stage firms,” said Darden Professor Ting Xu, an expert in entrepreneurial finance. “So, how do you convince talented employees, most of whom may already have a great job, to work for a company with little track record?”
The answer lies in their investors’ reputations. “When startups attract top-tier venture capitalists who invest in them,” said Xu, “they win an important stamp of approval, which can mitigate the uncertainty surrounding early-stage companies and facilitate recruiting.”
[This article has been reproduced with permission from University Of Virginia's Darden School Of Business. This piece originally appeared on Darden Ideas to Action.]