An investment in an organization is really an investment in the people who make that organization run. VC firms, such as Andreessen Horowitz, and private equity firms are acknowledging this important principle by hiring specialists to help their portfolio companies recruit qualified employees.
Investment firms who want to keep an eye on their investments and see lucrative returns would do well to educate their portfolio companies about the best practices for hiring and retaining talent. The fact that investment firms are now hiring internal experts to help their portfolio companies hire the right people is evidence for the important role that people play in an organization.
Traditionally, VCs and private equity firms focused primarily on providing support in the form of funds. But in recent years, these firms have seen the need to secure their investments by providing assistance to their founders in other areas, such as business development, marketing, and management.
Startups are usually comprised of small teams with a lot of responsibilities and therefore, require top-talent in order to grow and succeed. Recognizing that many founders lack experience in hiring talent and nurturing the professional development of their employees, investment firms are taking a more active role in helping them find and train great people and reduce employee turnover.
In fact, much of the money raised by organizations goes toward hiring and developing employees who can help their organizations scale as they grow. Effectively, most of the money raised by investors goes toward human capital. This is why it makes sense for investment firms to help their founders optimize the people side of their businesses to the fullest.