The VCs must ask themselves if they have CEOs who are capable of driving companies as the recession bottoms. Looking at the current slowdown in non-farm employment and the subsequent rebound strategies, HireLabs can forecast a recovery in the international labor market - lead by the US - sometime around Feb 2010 (Q1 2010). Very few CEOs of venture-backed companies have experience of riding a company through a recession successfully. The questions that investors should ask there CEOs is whether they are able to monetize on market-indicators as the recovery approaches. Investors who are looking to capitalize on the recovery should predominantly understand the teams that are running the companies, and assess the teams’ ability to analyze and perform the market indicators....

1. HireLabs| Perspective VC Series 3.0
Increasing Venture Capital Returns in Talent Assessment Technologies
A HireLabs Inc. Research
The investment's aspirations and potential for growth 2
As a rule of thumb, unless a business can offer the prospect of significant turnover growth
within five years, it is unlikely to be of interest to a venture capital firm.
Critical factors in identifying core business models of a venture prospect 3
Key issues and needs analysis
The Success model and examples 4
With a plethora of IPO filings for on-demand software, S.a.a.S will most likely take the
same growth path.
Sense On
Organizational Growth and Strategy
April 13
Summer 2009
HireLabs | Perspective

2. 1
Increasing Venture Capital Returns in Talent Assessment
Technologies
A HireLabs Inc. Research
The VCs must ask themselves if they have CEOs
1
who are capable of driving companies
as the recession bottoms. Looking at the current slowdown in non-farm employment and
the subsequent rebound strategies, Hirelabs can forecast a recovery in the international
labor market - lead by the US - sometime around Feb 2010 (Q1 2010).
Very few CEOs of venture-backed companies have experience of riding a company
through a recession successfully. The questions that investors should ask there CEOs is
whether they are able to monetize on market-indicators as the recovery approaches.
Investors who are looking to capitalize on the recovery should predominantly understand
the teams that are running the companies, and assess the teams’ ability
2
to analyze and
perform the market indicators.
Saleem Qureshi
President and COO
HireLabs Inc.
HireLabs | Perspective
HireLabs | Perspective
1
Including CEOs with a clear
understanding of the financial
drivers of an organization.
2
Across the board assessment
programs will ensure competent
workforce and leaders who can
prove critical in long-term
sustenance strategies.

3. 2
Figure A – Total Investments for Q2 2008 U.S Region – National.
3
enture capitalists prefer to invest in "entrepreneurial businesses". This does not necessarily
mean small or new businesses. Rather, it is more about the investment's aspirations and
potential for growth, rather than by current size. Such businesses are aiming to grow
rapidly to a significant size. Venture capital investors are only interested in companies with
high growth prospects
4
, which are managed by experienced and ambitious teams who are
capable of turning their business plan into reality.
The following article from TechPulse360, published on July 23rd, 2009, talks about the
increase in Venture Capital returns –
“It’s a buyer’s market for ……. venture investments. Deals sizes are down. The winner may
be venture capital returns. With investing levels down and fear of disaster high, venture
partners willing to take a risk are getting more for their money. And from the standpoint of
capital efficiency, startups appear to be getting further with less cash.
In the U.S., the median startup deal size fell 18% in the second quarter to $5 million from
$8 million a year ago. This is the lowest it’s been since 1999. The fall is especially deep in
clean-tech investing, where the median is now $4 million compared with $10 million last
year.
If there is any good news in this beleaguered industry it is this: money is going further.
The decrease may ultimately lift returns and give entrepreneurs a greater stake in the
companies they build. That could prove an incentive for a patient investor.”
HireLabs | Perspective
HireLabs | Perspective
3
Data chart courtesy of PWC US.
4
High growth prospects = Getting
further with less cash.

4. 3
In a presentation at the ABVCAP on April 16, 2008, Kevin Thompson, Practice Managing
Partner, Global Private Equity and Venture Capital Practice – Heidrick and Struggles,
rightly identified what Saleem Qureshi terms as critical factors in identifying core business
models
5
of a venture prospect –
Key Issues:
• At times, traditional executive search is
too slow for the hiring needs for Private
Equity and Venture Capital firms, while fee
structures restrict awarding assignments
until after acquisition/investment.
• Top talent is always of interest to PE/VC
firms in sectors of choice (current and
future).
• Understanding of new investment areas
requires understanding of strong
indigenous talent prior to acquisition.
• Today, most deals are shopped thus
leaving few opportunities for proprietary
deals or getting ahead of the investor pack.
• Executive key attributes for driving
performance vary from deal to deal.
Needs analyses:
• Consider alternate fee structures where
both parties “share the risk” of
deal/investment happening.
• Understand potential leadership needs
ahead of investments.
• Establish new ways to capture and deploy
talent beyond traditional executive hiring.
• Instigate talent mapping of future
investment areas incorporating knowledge
that is both published and that which is
“ungoogleable”.
• Increasing the accuracy of your human
capital valuations will improve your
investment performance.
• Determine most viable method using
executive search firm contacts to identify
deals in prime investment sectors ahead of
the general market.
HireLabs | Perspective
HireLabs | Perspective
5
Since talent is key to determining any
organization directional change, to better
manage it, a sustainable business model
must be in place to acquire, develop,
and retain key talent.

5. 5
According to a Preqin
6
report –
- The global private equity industry's dry powder (i.e., uncommitted assets) continues
to exceed $1 trillion
- The rate by which contributions outpaced distributions was 235% for buyout funds in
2008.
- In total, private equity funds are sitting on approximately $1.08 trillion in dry powder.
- PE funds are waiting for conditions to improve before putting it to work.
- The United States led the world with $608.9 billion in uncommitted capital.
- Europe was at $286.3 billion.
- The rest of the world was at $183.4 billion.
- The buyout sector remains the largest with $507.1 billion in dry powder waiting for
acquisition targets to be identified.
- Venture funds have $153 billion waiting to be put into action
- Especially with all that venture money waiting to be deployed, put your business
plan together now -- you might actually have a shot at getting funded!
Example of current VC backings:
SilkRoad technology is a provider of talent management solutions. This week they
announced the successful close of $54 million in venture funding. Many of the
requests come from European businesses that are interested in a new Talent
Assessment solution.
For VC funding, the businesses should ideally:
 Have a proof of business model
 Have operational excellence
 Be expanding their pipeline
HireLabs | Perspective
HireLabs | Perspective
6
Preqin makes it possible to track
and follow critical market intelligence in
the alternative investment sector.

6. 6
The following observations were noted by Brian Sommer, CEO of TechVentive, from
the HR Technology Show –
- SaaS is king in HR, talent management and other related solutions
- Clients want to see a true SaaS (software as a service) solution offering
talent assessments
- SaaS businesses marketing their hosted solution as a SaaS product
- SaaS encouraging their resellers to offer a hosted version of their solution.
Example of current VC backings:
Human resources draws VC funding as Authoria gets $22.5 million, Oct 2nd 2007 by
Tom Taulli www.taulli.com
The latest funding in the space is a $22.5 million round for Authoria, which "provides
talent management solutions," according to the company's website. It's the firm's fifth
round. The investors include Horizon Technology Finance, Velocity Financial Group,
Menlo Ventures, Austin Ventures and Van Wagoner Capital Management.
Companies like Authoria, HireLabs, SuccessFactor, and Taleo, take an on-demand
approach. That is, the technology is delivered via the Web, which tends to be
cheaper and easier. More importantly, it's a red-hot trend in tech, as seen with
Salesforce.com Inc. (NYSE: CRM) and Taleo Corp. (NASDAQ: TLEO).
With a plethora of IPO filings for on-demand software – which include companies like
NetSuite – we'll probably see S.a.a.S take the same growth path at some point.
HireLabs | Perspective
HireLabs | Perspective
6
Preqin makes it possible to track
and follow critical market intelligence in
the alternative investment sector.

7. HireLabs | Perspective
A talent assessment tool can provide measurable insight into a workforce. The
visibility will be unique in that it can –
- Reveal top performers
- Identify weak links
- identify critical-to-job success skill sets
- intelligently provide measurable data
Quality of hire drives exceptional business performance. Talent management forms a
critical business function in any economic climate. Streamlining talent management
systems with a dedicated talent assessment tool can greatly enhance value to
existing systems by improving objectivity in talent acquisition and retention.
There is no such thing as a recession-proof model. What businesses can do is to
apply the strategy of identifying key skill sets under different economic conditions,
transferring those skill sets to the rest of the workforce, and retaining that talent. This
will prove beneficial during both the economic downturn, as well as the rebound
stage.
Talent Assessments Lower Costs
- Time to hire
- Cost of hire
- Job boards
- Headhunters
- Decreased turnover
- Increased retention through
quality of hire
Talent Assessments Increase Productivity
- Metrics identification
- Data points for reporting
- Global benchmarks mirroring
- Lower HR burden of manually
screening candidates
- Improved acceptance of HR as a
strategic partner
HireLabs | Perspective
7
About HireLabs Inc.
HireLabs is a talent assessment company that grew out of Stanford University. It has used it’s intellectual property
workforce development.
built over the last 9 years and built a highly scalable technology which is currently provided as a S.a.a.S solutions for
www.hirelabs.com
support@hirelabs.com
1.650.492.5007 U.S
Copyright © HireLabs Inc. 2009. All rights reserved.
No portion of this document may be produced in any form without the prior written approval/permission of HireLabs Inc.
All products/services names, providers, and solutions mentioned herein may be the trademarks of their respective owners.
1.650.492.5007 International