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The best place to start: Capital + hands-on help across all startup dimensions

By

Head of Talent

As you will have read in our previous article, starting with the necessary skills in place is fundamental to startup success. In fact, 20% of all failures reported by founders are due to not having the right team.

From the outset, founders have a number of options available when looking to build their product: 1) Direct employment, adding to their in-house capacity; 2) outsource their work to agencies or third-party providers; and 3) hire freelancers to work on day rates that vary (often dramatically) depending on skill and experience.

All three options require some element of bootstrapping at these early stages. They also have various cost implications and more obvious ones around speed of delivery and quality of results.

Through our game-changing combination of cash investment and hands-on execution support we supercharge startups, allowing founders to focus on what’s important: The business of building their business. To quantify our value-add, above and beyond cash investment, we carried out an extensive comparison between what founders get from the FP team and the cost of alternatives available to them on the market.  

Based on 15 cold calls on project briefs previously carried out across the FP portfolio at both pre-seed and seed, we can say with confidence that we provide a better way for founders.

In fact…

Our team of 17 tech-product-growth experts are 32% faster and ⅓ of the market rate quoted by UK agencies and freelancers. Once you’ve got some traction, we also help you build the right team.

Hiring the right team

To make sure we got our numbers right, we collaborated with Nathan Callaghan, Managing Director at Futureheads; a firm who have nine years’ experience leading the provision of digital recruitment services across freelance and permanent hiring.

When we apply our in-house expertise and the results of these findings to the hiring options mentioned earlier it’s clear that we provide our founders with a better, faster and more cost effective route than agencies or freelancers.

Direct Hiring

Startups often start by building a small co-founding team of talented generalists, who need to cover all the bases. Some are lucky enough to raise a large round early on, and they go on to complement the co-founding team with talented experts in areas like product, design, growth and development.

Talented people like this are, of course, expensive and research we have gathered through both paid-access salary surveys (provided by Advanced HR) and publically available compensation information, shows salaries are often in advance of £100k.

Then, of course, co-founders and early employees also want equity, and as key hires who will drive your business at the strategic apex you will want to give them a meaningful stake. Based on our research, typical equity requirements for such strategic hires, particularly at Pre-Seed, are in the region of 5% each.

The data shows that working with the Forward Partners team is much more effective. We only employ the best and brightest within their fields. Our team hails from UK scale-ups including MindCandy, Google, Swoon, Property Partner and DueDil across tech, product, talent, PR and growth, so our people have equivalent or better levels of technical expertise to experts available for hire, but our startup experience is second to none. We’ve helped build over 20 companies from day zero and we know how to help founders execute with real skill and pace, what the shortcuts are and how to avoid common pitfalls. Two big benefits are that our team is available to all our partner companies from the day of investment, so founders don’t have to spend time sourcing talent, and you can get exactly the number of days of expertise that you need rather than over-provisioning in some areas and making compromises in others.

Founders use us to establish stronger foundations for their businesses, building everything to scale from day one, with the appropriate flexibility. By acting as an in-house Chief Marketing Officer, Chief Product Officer or Chief Technical Officer, the Forward Partners team provides strategic decision-making expertise and skill you may not have. This in turn allows our founders time to hire more junior talent, who can help with the everyday hustle, and can grow with your company as you scale.

Working with agencies

Forward Partners conducted 15 cold calls pitching project briefs that we have previously carried out as a team, across the FP portfolio. We spoke with 15 UK and international agencies, using clearly defined briefs that included challenges such as redesigns and rebranding, marketplace and ecommerce site builds and contingent and retained talent searches.  The results of these conversations demonstrate that at Forward Partners, we are one third of the market rate quoted by UK agencies and freelancers, and for that more affordable rate, are also 32% faster in our delivery.

The table below shows a sample of agency comparison project briefs for Forward Partners’ Pre-Seed companies.  

Project costs at Pre-Seed: A Forward Partners & Market Rate Comparison

Project

Forward Partners  Completion time (days)

Forward Partners Cost

(Pre-Seed)

Agency Completion time (days)

Agency Cost (quote)

         

Design Sprint + Prototype

15

£4,725

18

£18,000

Off-the-shelf Marketplace Platform

57

£15,000

76

£70,000

Bespoke eCommerce Platform (fully built)

163

£48,000

171

£180,000

Pre-Seed: Marketplace Platform (fully built)

133

£40,000

130

£80,000

Note: These subsidised pre-seed rates are only available to our pre-seed investments

Our execution support provides the very best skill and expertise at a subsidised rate for our Pre-Seed founders.  Furthermore, we appreciate the need for iteration and flexibility; pivots are common in startups. In response to needs to make such changes, agencies typically make subsequent charges and add additional, ongoing costs.

At Seed stage, Forward Partners are also offering a better way for founders to see results. Trends are similar; these briefs are typically more complex, and therefore agencies are likely to charge increased rates. The table below demonstrates a sample of agency comparison project briefs for Forward Partners’ Seed stage companies.

Project costs at Seed: A Forward Partners & Market Rate Comparison

Project

Forward Partners  Completion time (days)

Cost

(Seed)

Agency Completion time (days)

Cost (quote)

         

Seed: Company Re-Brand

31

£20,150

40

£71,000

Seed: Site Performance (testing / consultancy)

4

£2,600

3

£7,500

Seed: Growth Workshop

2

£1,300

3

£4,900

Seed: Mobile app

35

£22,750

70

£57,800

Working with Freelancers

One of our founders, having worked with our execution support team to build V2 of their product explained:

“Working with freelancers to design V1 of the site was one of the most stressful periods in my professional career.  It took months to coordinate and build. Working with Forward Partners allowed me to build V2 of the site around four times faster than it had taken working with freelancers'"

When considering freelancers, Forward Partners have collaborated with Nathan Callaghan at Futureheads who suggests that;

“Hiring a freelancer is a brilliant opportunity for businesses to build a relationship with a skilled individual and have the comfort of that one-to-one interaction within the company. If efficient, that relationship should be able to deliver quickly. Managed properly and with clear direction, a freelancer should deliver value to the business”

Nathan adds, “...the barrier to entry in the freelance and contract market is reduced, therefore it’s tougher on the hirer to know they’re getting someone they really need. A high level of internal competence is required, for example a strong CTO who not only knows what they really need in a freelancer, but who also knows how to manage a person and skill set that isn't comparatively available in the permanent market.”

Furthermore, with regards to the necessity for this internal knowledge, and the basis on which freelancers are oftentimes hired, Nathan agrees that this tends to be rushed and panicked...“we still get requests for freelancers to start ASAP. It’s important to be prepared.”

For startup founders, who may not themselves understand the tech space, or have individual technical skill, managing freelance engineers presents a real problem.  In these situations, Nathan perceives a risk in founders having “no way to validate if what the freelancer is doing, or the decisions they are making are of benefit both technically and for the product, and business. Comparatively for such founders, a managed service such as the one Forward Partners’ provides, is absolutely worth its weight in gold”

A further consideration is ‘ramp up time’. As a founder, if you aren’t able to effectively manage how to get the best out of your freelancer, a disconnect is possible between what you think you’re getting and the results.  In this situation, the disconnect may not present itself until what our collaboration with Futureheads suggests could be two weeks of your time.

Hiring and the cost of getting it wrong:

Making a bad hire has quantifiable impacts, the most obvious of which are direct costs, that could have been better spent more efficiently or elsewhere within your business.  Furthermore, it is well documented, for example here by Forbes, that impacts on efficiency, productivity, motivation and moral, which are less easily or obviously quantifiable, actually rank “ahead of monetary losses” in scenario of getting it wrong when finding the additional skill needed.

Research, conducted by the Recruitment and Employment Federation, suggests that “a poor hire at mid-manager level with a salary of £42,000 can cost a business more than £132,000” and that “four in ten employers (39 per cent) admit that the interviewing and assessment skills of their staff should be improved”

For early stage start-ups the impact and palpability of these kind of financial and productivity losses can be terminal. It stands to reason therefore that expertise in finding the right people for your business is an area worth prioritising.

At Forward Partners, our dedicated in house execution support provides our founders with this expertise; not just with advice and guidance, but with hands-on execution that not only supercharges startups but also helps founders avoid the cost of getting it wrong.  Our team of experts help founders ensure they are building the right foundations across product, tech and growth.

Once you’re further down the line, we help you build those skills in-house. We ensure through our internal HR and Talent expertise that founders are recruiting the best possible talent for their businesses, at the right stage.