Help Wanted at Startups Nationwide

As the country looks towards economic recovery, an increase in the number of U.S. jobs has been cited as the single most meaningful measurement for tracking our progress.

Large blue chip companies are often relied upon as the drivers of employment, as well they should be. Their numbers are significant. The National Venture Capital Association (NVCA) has tracked jobs at publicly traded companies that were founded with venture capital funding. These companies employed more than 12.1 million people in 2008. Equally as important, but less recognized, are the small startups that number in the thousands. These businesses continuously foster a culture of entrepreneurial spirit and best represent our future.

And they’re hiring.

In early 2009, the NVCA and the job board StartUpHire.com partnered to collect data on job openings at venture–backed startups in the United States. Launched earlier this year as a service to benefit the startup community, StartUpHire currently lists about 10,700 jobs at more than 2,500 companies that are backed by venture capital firms.

While the StartUpHire jobs represent a fraction of the total number of open positions at emerging companies nationwide, these listings represent a microcosm of employment trends worth analyzing.

From an industry sector perspective, IT continues to represent much of the opportunity. As of October 2009, 29.5% of the StartUpHire jobs were in the software industry. Following at a distant second was IT services at 18.8%, while healthcare services and business products and services, both came in third at 7.5 percent.

The showing of the cleantech and energy sector in the top 5 at 5% of the jobs is telling as this emerging growth sector ranked ahead of telecommunications, media, semiconductors and financial services.

Meanwhile, jobs in life sciences represented a combined total of 6.9% of all StartUpHire jobs (4.2% in biotechnology and 2.7% in medical devices). These jobs tend to be lower in total numbers, but generally higher in salary.

Startup companies engender an entrepreneurial culture that lives long after the early days, often inspiring employees to spin out and create entirely new companies with what they have learned.

Overall, venture-backed startups have historically hired highly skilled workers. Almost half of the jobs on StartUpHire are technical, with 48% in the functional areas of engineering, product development, science or quality assurance. Marketing and business development-related jobs are the second most prevalent at 16 %, followed closely by manufacturing, operations and other at 15 percent. Sales-related positions accounted for 13% of the jobs in StartUpHire.

These numbers support the notion that the United States must continue to nurture science and engineering students to meet the workforce needs of the next century.

Not surprisingly, job location at startup companies mirrors the venture investment concentrations. California has the most jobs open on StartUpHire at 39%, followed by Massachusetts (7.9%), New York (7%), Texas (6%) and Washington State (3.7%).

Regionally, the Mid-Atlantic states have more collective jobs at 13% than New England at 9 percent. The Southeast also fares better on StartUpHire accounting for 8% of the jobs than the Mid-West (6%), or the Northwest or DC regions (both at 5%).

While startup companies may only hire a fraction of the workers employed at blue-chip corporations, their impact is on equal par. These organizations are poised for growth and positioned to become substantial economic contributors in the decade to come. They are not only creating jobs but they are doing so in the industries that will keep the United States competitive both economically and technologically. Startup companies engender an entrepreneurial culture that lives long after the early days, often inspiring employees to spin out and create entirely new companies with what they have learned.

The NVCA and StartUpHire will continue to track these job openings so that we may better understand employment trends. Over the last year, as the economy struggled and jobs were lost, U.S.-based venture-backed startups continued to hire employees. It is an engine that should not be overlooked as the country begins to regain its footing and chart a course for growth and innovation.

Mark Heesen is president of the NVCA and can be reached at mheesen@nvca.org. Steve Fredrick is co-founder of StartUpHire and general partner with Grotech Ventures. He can be reached at sfredrick@grotech.com.