Monday, November 14, 2005

Finding Angel Employees

From what I heard in a few sessions at the Indiana Venture Conference, Indianapolis could use a service like this for bio tech and high tech start-ups. Hiring executive staff for equity instead of salary isn't unheard of, it's just sometimes hard to find the people to connect together. Enter PeopleConnect in San Francisco -- an employment agency like no other. From the SF Chron.

The basic concept of tech executives working for equity isn't new. For years, founders of startups have compensated themselves and a few key employees with stock options instead of cash. Recruiters have occasionally placed executives in such situations and taken their own payment in the form of stock.

But PeopleConnect is the first search firm to market a program of recruiting employees who will work for equity. "A friend of mine calls them 'angel employees,' " Shapiro said, comparing them to angel investors, who fund early-stage companies. The concept has its roots in the collapse of the Internet bubble. A serial entrepreneur with an eclectic background, Shapiro ran baseball fantasy camps and started a high-profile business buying and selling used Levi's before launching PeopleConnect in 2000 at the height of the dot-com boom.

The company thrived for a year. Then the bubble burst, VC investment and tech hiring ground to a virtual halt, and PeopleConnect found itself struggling to survive. Many recruiters left the field. But Shapiro saw an opportunity: matchmaking for companies that needed employees but didn't have cash, and unemployed tech veterans who wanted to work and didn't need a paycheck right away.

"I saw early-stage companies presenting (to investors), and a lot of the time being told, 'If you had more people on your team, we'd invest,' " Shapiro said. "Meanwhile, there were people out there who loved the startup craze and would rather be employee No. 6 than 60. They're not necessarily wealthy people, but people with some money saved up or a working spouse."

Their concept is an interesting one. Judging on the number of people I know here who have businesses even in traditional industries but need help growing or those with the intellectual property who need help with commercialization, the idea of helping entrepreneurs find partners excites me. Many states like Indiana are small enough that major start-ups have resources through a relatively small VC and funding community. But even in small states -- especially ones like Indiana with a burgeoning start-up community -- there's a need for help. PeopleConnect should find an angel employee to help them take this to areas across the country with the best opportunities. Read the entire article.


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