Once the juggernauts of the hiring world, the tech industry has been reducing headcounts in recent years. This trend isn’t just confined to the tech giants; startups, too, are stretching venture dollars further by hiring less. According to recent data from Carta, a cautious approach to hiring is the new normal in the startup ecosystem.

The era of zero-interest rates once prompted a stockpiling of talent, particularly software engineers. Rapid expansion was encouraged without much immediate pressure to show profitability. Rising interest rates have meant that startups now face a more discerning investor base — one that is focused on sustainable growth rather than sheer scale.

Although the average deal size for early-stage startups has actually grown, PitchBook data reveals that these companies are increasingly focused on maximizing their resources, getting more mileage out of every dollar raised. 

This trend is evident in the staffing numbers: startups that raised seed funding in the first half of 2024 had an average of 5.3 employees, down from 6.9 just three years ago. Series A and C startups show a similar pattern, with smaller teams compared to 2021.

The one exception to this trend is Series B startups, which have slightly larger teams than they did three years ago. This anomaly is largely due to these companies being at a critical juncture where additional talent is necessary to scale and meet the demands of their next growth phase.

Even as some companies strategically add to their ranks, overall hiring remains subdued. January 2024, traditionally a strong month for recruitment, saw 27,677 new hires — a 29% drop from the previous January. Carta also highlights that this was the fewest January hires this decade, signaling a broader trend of cautious growth.

Doing More with Less

Given the current state of the venture market, characterized by tight capital and uncertain economic conditions, it’s no surprise that founders are becoming more resource-conscious. The focus is squarely on making every dollar count, ensuring that investments in talent and infrastructure yield the highest possible returns.

But innovation doesn’t have to come with a hefty headcount. By partnering with an innovation consultancy, startups can access the specialized expertise they need to navigate critical growth phases without the long-term commitment of additional full-time staff. 

This approach allows companies to remain agile, responsive and focused on their core mission.

When an innovation consultancy has experience in both strategic leadership as well as specific departmental roles, they can clarify what each team should be doing to deliver a product, improve product experience, and achieve growth objectives. They can be a company’s interim Chief Product Officer today while showing internal team members how they can do it in future. (Or pave the path for new hires.)

Growth with flexibility built-in

Most late-stage start-ups don’t think about hiring a consultancy to fill these gaps. They’re seen as too expensive, and the business is changing too rapidly to create a clear scope of work.

For start-ups between growth stages, leadership changes, resource issues, and market shifts are not anomalies. Unexpected information emerging through the process happens frequently.  

That’s why it’s so hard for startups to find the right talent mix as they scale. Candidates may know one function of the business well but don’t have the management and strategy experience for an entire program. Those with that leadership experience often come with high price tags.

This makes engaging a consultancy an attractive option because a consultant can bridge the executive strategy experience with product development, giving start-ups the flexibility to simultaneously fine-tune operations and category-fit while delivering a high-quality product to market. 

No one’s startup runs perfectly (no company runs perfectly, period)—and no one likes to admit that they need executive cleanup. But when things get messy, and the team starts to struggle, a consultant can provide reassurance because they’ve seen it before. This makes the engagement meaningful and the outcome valuable.

In a shifting funding landscape, startups must be more strategic in how they allocate resources to scale. Leveraging the expertise of an innovation consultancy gives startups the ability to navigate the complexities of growth with a leaner, more focused approach — ensuring they remain agile and responsive without overextending themselves and their teams.