HR Checklist: Pre-Angel Investment

At this stage, startups are maybe just a concept that's been put into a powerpoint presentation to pitch to Angel Investors. You might be thinking that there wouldn't be any need to think about HR this early. However, if you get what you're looking for, namely funding, you're going to need to dedicate as much of your focus on turning your concept into a reality instead of researching employment laws all day. Doing a little homework at this phase may even help with your presentation to investors by showing that you're thinking ahead about managing risk and addressing the challenges of growing your budding enterprise. Here are a few items to bear in mind before you dive headfirst into becoming an employer:

Talent Acquisition (aka Recruiting)

Although most startups have a core of founders that are prepared to wear multiple hats to get things off the ground, there will come a time when specialist professionals will be needed to keep moving forward. Since that doesn't usually happen until later rounds of funding, for now just think about how many people you'll need to get a working model of your concept up and running. Recruiting firms can charge upwards of 30% of the annual salary of a position, so if you don't have all the people you need in the core group, it could burn through your funding pretty quickly. Alternatively, you could look into bringing in contractors on a project level basis or talk them into joining the team in exchange for a little equity.


Unless you have another way to obtain coverage, like through a spouse or your day job, your probably going to have to look into a way to get a group insurance policy for your startup to offer health benefits to your employees. The issue most entrepreneurs run into is that these policies are only for employees and don't extend to owners, meaning you'll need to get individual insurance for most everyone who has an equity stake in the company. The premiums in that market space vary wildly and can get pricey real fast, especially if you have health conditions. Because of this it can be tempting to forego offering insurance at all, but studies have shown that aside from pay, benefits are one of the most important factors for candidates considering an offer for employment. You could save yourself valuable company equity by thinking ahead and putting some of these programs into place.

Wage & Hour Compliance

If you think you're going to need to hire even one person as a payrolled employee, you must be prepared for the litany of rules and regulations that you are subject to under state and federal law. There are strict guidelines for the manner and amount someone must be paid, mandatory meal and rest periods, regulatory postings you'll have to keep updated, etc. The penalties for breaking these rules are severe. For example, having to shell out $1,100 for each time you failed to pay someone overtime when it's due can chew through funding in a hurry and possibly cost you the confidence of your investors! Before you bring in that first employee, make sure you have a professional HR consultant or firm onboard to keep you out of trouble.

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