By Stephanie Holmgren

Startup growth can happen fast.

A company finds product-market fit. Funding follows. The team expands. New customers create new demands. Roles that were clear six months ago suddenly look very different, and people who joined to do one job are now responsible for three.

That momentum is exciting. It can also expose problems very quickly.

Today’s venture market makes that especially important. Startup fundraising strengthened significantly in 2025, with companies on Carta raising nearly $120 billion—about 17% more than the previous year. But that capital was concentrated into fewer deals, with AI companies attracting a disproportionate share of investment. In other words, there may be capital available, but expectations for growth and execution remain high.

That is why founders, investors, and leadership teams need to look beyond the business plan.

They need to look closely at the people who will execute it.

You Can Scale a Product Faster Than You Can Scale a Team

In the beginning, startups often work because a small group of people is willing to do whatever needs to be done.

Job descriptions are loose. Communication happens naturally because everyone is close to the work. Decisions can be made quickly. People step outside their roles without thinking twice about it.

Then the organization grows.

Suddenly there are new functions, new managers, new locations, more customers, and more people who were not there when the company was founded.

What worked with 10 people may not work with 50. And what worked with 50 will probably need to change again at 150.

This is where people strategy becomes business strategy.

The questions change from simply “Who do we need to hire?” to:

• What capabilities do we need for the next stage of growth?
• Are people in roles that fit their strengths and behavioral drives?
• Do our managers know how to lead the people they’re now responsible for?
• Can our leadership team make decisions effectively together?
• Are expectations clear?
• Is the culture we are creating intentional—or simply happening to us?

These aren’t just HR questions.

They’re growth questions.

Hire for the Role You’re Building, Not Just the Resume in Front of You

Growing companies often feel pressure to hire quickly.

But a great resume does not automatically mean someone will thrive in your organization, on your team, or in the role you’re asking them to perform.

This becomes even more important when roles are evolving.

Rather than starting with the candidate, start with the job.

What does this role actually require?

Does the person need to move quickly with limited structure? Build relationships constantly? Work independently for long periods? Challenge established thinking? Create process and consistency? Manage competing priorities?

There isn’t one ideal behavioral profile for a startup employee.

There is an ideal fit between the needs of the role, the needs of the team, and the person doing the work.

Behavioral and people data can help leaders make those expectations more visible. It can provide another lens alongside experience, skills, interviews, and professional judgment to help organizations make more intentional hiring decisions.

And that matters because hiring is only the beginning.

Your First Managers May Need the Most Support

One of the most common transitions in a fast-growing company is also one of the hardest:

A strong individual contributor becomes a manager.

They know the business. They deliver results. They solve problems.

So naturally, we assume they’ll be good at leading people.

But managing people requires a different set of capabilities.

Managers need to coach, delegate, communicate expectations, navigate conflict, give feedback, motivate different personalities, and make decisions when there isn’t always a clear answer.

Many haven’t been taught how.

Deloitte’s 2025 Global Human Capital Trends research found that 36% of managers surveyed felt they were not sufficiently prepared for the people-management aspects of their role. The same research emphasizes that coaching, developing, motivating, and nurturing people are becoming increasingly important parts of management.

For a startup, that gap can become amplified quickly.

A manager who struggles to delegate becomes a bottleneck.

A manager who avoids conflict allows problems to grow.

A manager who communicates with everyone the same way may unintentionally disengage members of the team.

Promoting someone is not the same as preparing them to lead.

Give new managers tools, coaching, feedback, and insight into themselves and their people as early as possible.

Build the Team, Not Just the Org Chart

Startups understandably spend a lot of time thinking about organizational structure.

Who reports to whom?

What positions do we need?

Where should this function live?

Those are important questions. But an org chart only tells you how people are arranged.

It doesn’t tell you how they will work together.

Two highly capable executives can have very different ways of processing information, communicating, making decisions, taking risks, or handling conflict.

Neither approach is necessarily wrong.

The challenge is helping people understand those differences before they become friction.

This is where leadership teams can benefit from looking at team dynamics intentionally.

Ask:

Where do we naturally move quickly?

Where are we likely to get stuck?

Who challenges assumptions?

Who creates structure?

Who pushes for action?

Who slows the group down long enough to consider risk?

What perspectives are missing?

The goal isn’t to create a team where everyone thinks or behaves the same way. In fact, that can create its own risks.

The goal is to build enough awareness and trust that differences become useful.

Culture Is Being Built Whether You Intend It or Not

Founders sometimes think culture is something they can address once the company becomes larger.

But culture starts much earlier than that.

It is being shaped by what leaders reward, tolerate, communicate, and model every day.

It shows up in how decisions get made.

It shows up in how conflict is handled.

It shows up in whether people feel comfortable challenging an idea.

And it shows up in what happens when the pressure is on.

As the organization grows, leaders need to become more deliberate about the environment they are creating.

McKinsey’s organizational health research emphasizes alignment, adaptability, execution, and renewal as important components of sustained organizational performance. Its research has found that healthy organizations are significantly more likely to outperform unhealthy ones over the long term.

For a startup, that means culture can’t simply be the personality of the founders.

It needs to become something people throughout the organization understand and can operate within.

Connect Your Talent Strategy to Your Business Strategy

One of the biggest mistakes growing organizations make is treating talent planning as something separate from business planning.

The two need to happen together.

If your business strategy calls for doubling revenue, entering a new market, launching a new product, making an acquisition, or rapidly adopting AI, ask what that strategy requires from your people.

Do you have the leadership capabilities?

Do you have the right roles?

Where are the talent gaps?

Where are you overly dependent on one person?

Which managers need development?

How will the organization need to behave differently?

What will employees need to learn?

Where could team dynamics slow execution?

Deloitte’s current human-capital research frames the challenge in much the same way: organizations need to consider the work that must be done, the workforce needed to accomplish it, and whether the organization and culture enable performance.

Those conversations belong at the leadership table—not after the strategy has already been decided.

For Investors, People Risk Is Business Risk

The same principle applies to venture capital and private equity firms.

Financial, commercial, and technology diligence matter.

So does leadership and organizational diligence.

PwC notes that private equity firms increasingly examine whether portfolio-company leadership teams have the capabilities necessary to execute the value-creation plan, including their ability to lead through operational change and build trust across the workforce.

That makes sense.

A strategy can look great on paper and still fail in execution if the organization doesn’t have the leadership capacity, talent, clarity, or culture to deliver it.

Investors can ask:

• Does this leadership team have the capabilities required for the next stage of growth?
• Are the right people in the right roles?
• Where could leadership dynamics create risk?
• Are key roles overly dependent on individual founders?
• Does the organization have managers capable of scaling teams?
• Can this culture support the growth plan?
• Where will leadership development or coaching have the greatest impact?

Those insights don’t replace traditional diligence.

They add another important dimension to it.

Don’t Wait for a People Problem

When organizations grow quickly, it can be tempting to wait until something is clearly broken before addressing people issues.

A key employee leaves.

Two executives stop working well together.

A new manager struggles.

Engagement drops.

Decision-making slows.

The founder becomes the answer to every question.

By then, you’re solving a problem under pressure.

A better approach is to build the people infrastructure alongside the business.

Get clear about roles.

Understand your people.

Develop managers before they are overwhelmed.

Create ways to have productive conflict.

Assess team dynamics.

Revisit what the organization needs as the strategy changes.

The goal isn’t to add bureaucracy to a startup.

It’s the opposite.

It’s to give people enough clarity, self-awareness, and support to keep moving quickly without creating unnecessary friction along the way.

Technology, capital, and a compelling idea can create tremendous opportunity.

Your people determine what happens next.

As your business scales, make sure your people are able to scale with it.

Frequently Asked Questions

Why is people strategy important for startups?

A startup’s business needs can change rapidly as it hires, raises capital, enters markets, and adds customers. A people strategy helps leaders determine what roles and capabilities are needed, how teams should work together, where leadership development is required, and whether the organization’s talent can support its growth strategy.

When should a startup begin developing a talent strategy?

Earlier than many founders expect. Talent strategy becomes important as soon as an organization begins making deliberate decisions about roles, hiring, management, leadership, and culture. It does not need to be complicated. Starting with clear role expectations, thoughtful hiring, manager development, and team alignment can create a strong foundation for growth.

How can behavioral data help a startup?

Behavioral data can help leaders better understand the behavioral requirements of a role and how an individual’s natural drives may influence the way they work, communicate, solve problems, and interact with others. It can support hiring, onboarding, team development, management, and leadership conversations when used alongside experience, skills, and professional judgment.

What are the biggest people challenges when a startup scales?

Common challenges include unclear roles, rapidly promoted managers who have not received leadership development, inconsistent communication, founder dependency, leadership-team conflict, talent gaps, and a culture that has not evolved with the size of the organization.

How can startups prepare new managers to lead?

Start by recognizing that strong individual performance does not automatically translate into strong people management. New managers need support with coaching, delegation, feedback, conflict, communication, motivation, and decision-making. Providing leadership development and insight into the behavioral needs of their employees can make that transition more effective.

What is the role of culture in startup growth?

Culture influences how people make decisions, communicate, respond to change, handle conflict, and work together. As a startup grows, leaders need to become increasingly intentional about the behaviors and working norms that will support the company’s strategy.

Why should venture capital and private equity firms evaluate leadership and talent?

Leadership and organizational capabilities affect whether a company can execute its growth or value-creation plan. Evaluating leadership teams, talent gaps, management capabilities, succession risks, and culture can give investors additional insight into potential execution risks and opportunities.

How do you align people strategy with business strategy?

Begin with the business plan and work backward. Identify the capabilities, roles, leadership behaviors, and organizational structure required to execute the strategy. Then assess where the organization is today, identify gaps, and prioritize hiring, development, coaching, succession planning, or team alignment accordingly.

About MCG Partners

MCG Partners is a leadership and talent optimization firm that helps organizations align their business and people strategies to improve performance. We work with leaders and teams on leadership development, organizational effectiveness, team alignment, talent strategy, and behavioral insights.

MCG Partners a certified partner of The Predictive Index®.

To learn more, contact Stephanie.Holmgren@mcgpartners.com.