The reason has nothing to do with redundancies and efficiency savings.
It is because high technology start-ups require capital to finance both technology investment and, crucially, staff expansion. In May, Penta concluded its first deal ploughing £10m (a 40 per cent equity commitment) into McLaren, a systems integrator and document management software specialist whose clients include BP Amoco and Railtrack. The company, whose current 90 staff work in the UK, US and Europe, is hoping to expand numbers to 400 over two years.
“In a business like this, the ability to recruit, manage and deliver the growth is a key issue. We have to be sure that the culture is right and the management ambitious, dynamic and positive.
“In our meetings, the managing director was effectively the HR with operational support from an HR executive and a great deal of time was spent studying the sifting process – the qualities you are looking for and the incentivisation.”
If a desire to keep employee numbers down is common in the venture capital fraternity, Macnaughton says there can’t be fixed attitudes that cover every deal.
“McLaren is hoping to win major contracts all over the world so inevitably if you are going around integrating the systems of major corporates, you are bound to be something of a body shop.”
He says the HR people he has come across broadly divide into two camps. The more dynamic and switched on have often been involved in having to recruit and develop very quickly. But there are also those inherited in management buy-outs. They are, he says, “the bureaucratic, sleepy types who can’t think outside corporate philosophy and set procedures”.