Are Your Portfolio Companies Ready to Scale?

Most early-stage founders spend their time exactly where they should: building product, closing customers, and managing cash. HR rarely becomes a priority at this stage - not because founders don’t care, but because they assume they can manage it as they grow.

Investors, meanwhile, pay close attention to whether a company can maintain momentum as the team expands. They look for early signs that the HR foundation can support scale - not just today’s operations.

By the time a company reaches 25–75 employees, the strength of that foundation becomes apparent in how the company runs - in the clarity of expectations, the consistency of decisions, and the stability of the culture as the team grows.

This isn’t about heavy HR. And it’s not about adding executive-level HR when the organization is still too flat for it. It’s about whether HR has been designed to keep the company moving forward as challenges and complexity increase.

Why HR Gets Deferred

At this stage, HR simply isn’t a priority for most founders. It’s viewed as manageable, low-risk, and something they can handle as they grow. There’s nothing unusual about that - early teams are small, communication is direct, and most decisions feel straightforward.

Investors, meanwhile, often assume that by the time a company reaches this stage, some level of structure is already in place. Not a heavy HR function, but the essentials that keep hiring on track and decisions consistent.

The gap between these two realities is where issues tend to show up. Not all at once, but gradually:

• Hiring starts to slow because managers are improvising.

• Compensation decisions become inconsistent.

• Culture shifts in subtle ways no one intended.

• Gaps in compliance or documentation begin to surface.

• Recruiting costs rise simply because there’s no clear plan.

None of this is dramatic - until the company hits a moment where it matters. And by then, the impact is much harder to unwind.

Why This Stage Matters

Most startups between 25 and 75 employees reach a predictable inflection point: too big to wing it, too lean to hire a full-time HR executive.

It’s the stage where operational readiness becomes clear - the point where investors start noticing whether the company has the structure and discipline to support real scale:

• Will hiring targets be met as growth accelerates?

• Is equity being allocated with discipline?

• Are managers equipped to lead, or just dealing with it as they go?

• Is culture strengthening or drifting as the team expands?

• Is the company protected from avoidable risk?

None of these questions require a heavy HR organization. They simply require a strong HR foundation - one that scales with the business instead of getting ahead of it.

The Misconception

At this stage, HR often sits lower on the priority list - not because it’s unimportant, but because other demands feel more urgent. As a result, HR is often associated with cost, headcount, or commitments the company doesn’t feel ready for.

For many founders, HR feels like it means:

• hiring a full-time HR leader,

• taking on overhead they can’t justify, or

• signing up for a Professional Employer Organization (PEO) with cost structures designed for convenience, not growth.

But a strong HR foundation doesn’t require any of that.

It requires clarity, consistency, and intentional guidance - not additional headcount. And the right model can deliver the impact of a high-impact HR leader without:

• the overhead of a full-time hire,

• the expense of a Professional Employer Organization (PEO),

• or long-term contracts that don’t flex with the business.

This model works especially well at this stage - providing real HR foundation without adding overhead. It’s simpler - and far more accessible during this phase - than most founders realize.

Early Indicators of Operational Readiness

Investors look for signals that a company can sustain momentum as it grows - not just create it. They’re paying attention to whether the organization can handle the next phase without slowing down or taking on avoidable risk.

In practical terms, they want to know:

• Hiring can keep pace with growth.

• Compensation and equity decisions are made with discipline.

• Managers can lead effectively as the team expands.

• The organization can operate without relying solely on the founder.

• HR risk is being managed, not left to chance.

These are the early signs of a company ready to scale - and they can be established well before a full HR team is required.

Why a Scalable HR Foundation Matters

A scalable HR foundation gives founders what they need most at this stage - the ability to grow without losing momentum. It keeps hiring predictable, decisions consistent, and the organization steady as the team expands.

For investors, this HR foundation is one of the clearest signals that the business is ready for scale. It shows something more fundamental: that leaders are being disciplined stewards of the equity and investment behind the business. It’s a sign that decisions around hiring, compensation, and organizational structure are being made with intention - not out of reaction or urgency.

And the reality is straightforward: this HR foundation doesn’t require extra headcount or long-term commitments. It’s fully achievable at this stage, and strengthening it early helps the company stay ahead of the growth challenges and HR complexities that come with scale.