Less pay, increased scrutiny, limited job offers: Rough ride for senior talent in start-ups

The overall funds coming into Indian start-ups through the private equity (PE) and venture capital (VC) routes plummeted to a third in 2023 over the previous year. PE/VC funds made 603 bets on start-ups worth $8.14 billion in 2023, while last year, even with the funding winter beginning to cast a shadow on start-up investments in India, private market investors had made 1,224 bets worth $24.3 billion, the data from Venture Intelligence showed.

Where the average job search time at the leadership level took 3-4 months, it has now increased to 6-9 months. This matches the average time an organisation takes to close a leadership-level position.

The number of offers an individual will get when looking for an opportunity at the leadership level has fallen from 3-5 to just 1-2.

ALSO READ | Demand for psychologists rises as corporate employees battle workplace stress

“There's been a notable increase in free agents at the leadership level compared to the pre-funding winter period. We're seeing a jump of about 18-25 percent, which is significant. Functions which have seen the highest rise in free agents include technology roles like engineering/product management and business/operations management roles,” Rohit Srivastava, Senior Partner LONGHOUSE Consulting, told Moneycontrol.

Changing dynamic

Amid limited opportunities for senior talent, start-ups are at an advantageous stage as the joining ratio has improved from 40-50 percent to 80-90 percent.

Contrary to the pull factor of monetary benefits, and growth, the talent movement in the first half of 2024 is fuelled by the push factors due to a significant shift in how companies approach business growth.

“Before the funding winter, it was all about rapid expansion, grabbing market share, and user acquisition. Companies were burning through cash to scale quickly, often prioritising growth over profitability. But things have changed dramatically,” Srivastava said.

ALSO READ | Job offer-shopping in niche roles rises as talent seeks more pay

However, he said businesses are now focusing on sustainable growth and profitability as they look at metrics like revenue per user and employee efficiency, rather than just raw user numbers.

“When companies are laser-focused on profitability, they are not spending as freely on new initiatives, marketing or hiring. They are trying to do more with less, which means existing employees might see their growth opportunities shrink or their jobs become less secure,” Srivastava said, adding that while these factors were always important, they became more prominent in the funding winter.

Interestingly, at least 13 CXOs were hired externally compared to four who were internally promoted in the first half of 2024. For instance, Ritesh Pai was hired by PhonePe to lead its International Payments as CEO. Meanwhile, BharatPe, DealShare, InShorts and Acko opted for internal movements for CEO positions.