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Does Over-Committing to Company Perks Hurt Your Funding Chances?

  • Finance
  • Article
  • 6 min. Read
  • Last Updated: 12/09/2015

Can company perks hurt funding
Popular small-company perks include free meals, fitness club memberships and tricked-out work spaces. But, when the time comes to seek out venture capital funding, could these expensive perks turn off potential investors?

Table of Contents

The competition to attract talent is fierce, and startups commonly offer generous perks as a way to entice top employees. While established corporations often give employees health insurance, a retirement plan, and paid time off, startup companies may offer something extra to differentiate themselves. Popular small-company perks include free meals, fitness club memberships, and tricked-out work spaces. But when the time comes to seek out venture capital funding, could these expensive perks turn off potential investors?

Invest in Employee Success Beyond Company Perks

Many leaders of startups believe unique perks can attract talented employees who otherwise may not have considered their company. While offering something different can be an initial attention grabber, the best employees also want to be challenged and energized by their work. Top performers desire a position with a clear path of advancement. Although free lunches are appreciated, startups should also continue to focus on providing employees with tools for success. Spending on perks is important, but so is investing in the technology that will help employees contribute to a high-quality product or service.

Budget for Perks and Stay Within the Limits

To make sure spending on company perks doesn't get out of control, all spending on employee extras should be part of an approved annual budget. This spending can be calculated as a certain percentage of salaries. If a company exceeds their budgeted perks, a clear supporting reason for this excess should be documented. This ensures that investors’ money is contributing to growth and not funneled toward items that don’t enhance overall company performance.

Find Low-Cost, High-Impact Perks

Finding perks that will motivate employees is a key to startup success. Perks should not only attract new employees, but also increase existing workers' job satisfaction. Employee surveys can identify which perks are truly valued by staff members. To keep costs down, organized team-building activities serve to encourage interaction in a fun environment and can also result in higher employee satisfaction. For example, if fitness activities rank highly among your staff, sponsor classes for employees or set up a basketball court in the parking lot. This gives employees a chance to socialize in a more causal setting away from their desks.

Company perks don’t necessarily have to cost a bundle to be effective. Employees are often motivated by simple recognition for their efforts. A strong management team spends time understanding what employees need and finds the best ways to reward great performance without breaking the bank — and repelling potential investors.



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* This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date.

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