Wanted: investors for online job board

August 25, 2009

elena-bajicIvy Exec, a job posting and recruiting website, targets high-profile professionals by offering exclusivity: job-seekers must first be approved as a member to access the site’s job listings.

“They don’t like to be part of the masses,” explained Ivy Exec founder Elena Bajic (read her entrepreneur journal) about the site’s 25,000 members. “They’re looking for a way to differentiate themselves, an exclusive club and a network of peers. So the fact that they have to get approved to be members of Ivy Exec is very important to them.”

THE PITCH

Initially free to join, Ivy Exec recently started charging a monthly fee that ranges from $22-$42 depending on the package. On the corporate side, Bajic charges an average of $8,000 for her selective recruitment services, which include pre-screening all job applicants to find a better match. In this way Ivy Exec operates more like a dating site for job seekers.

The recession has been both helpful and hurtful for Bajic. It slowed her growth as firms cut back or stopped hiring altogether, but allowed her to take advantage of lower infrastructure costs, like rent, furniture and office supplies, to streamline her business. When the economy picks up and companies start hiring again, Bajic hopes Ivy Exec will be well positioned to cash in on the abundance of over-qualified candidates looking to land high-level jobs.

To facilitate that Bajic is seeking to raise $1.5 million in funding to assist Ivy’s sales and marketing push and to upgrade the website. Bajic said she wants to boost Ivy’s membership to 100,000 by the end of 2010, which would significantly increase revenues.

“We started fundraising a month and a half ago and we already have commitments from several investors,” said Bajic, who is primarily talking to angel investors in the New York area. Bajic hopes investors see Ivy Exec as a kind of Web 3.0 job board. “In the past decade there has been little innovation and most job boards follow the same model and cater to a very broad market. Few job boards are trying to change the way recruiting occurs and that’s what we do at Ivy Exec.”

TAKING IT TO THE EXPERTS

john-youngerJohn Younger, the founder and CEO of California-based recruitment outsourcing company Accolo, was confident that Bajic will attract enough investors to get funded, but was less optimistic about her company’s staying power.

“She is swimming in the circles where you have access to a lot of money,” said Younger, who anticipated that most of Ivy’s membership would hail from Ivy League universities and therefore have the means and connections to help Bajic attain her funding goal. “There’s a really intensive ethnocentric ‘we’ll go out of our way to help each other’ vibe to the Ivies that is going to serve (Bajic) well.”

However Younger pointed out that this “snob appeal” would ultimately hurt Bajic’s business growth, as the talent pool is finite and her service to employers is predicated on the assumption that effective executives do not come from the University of Nebraska or that “morons” don’t come from Harvard. “The underlying assumption that people who go to Ivy League schools are categorically smarter or better for the jobs is simply false. The hiring manager wants the best possible person and does not really care where the right person comes from, as long as that person walks in the door.”

mark-susterMark Suster, a partner at Los Angeles-based venture capital firm GRP Partners, said Ivy Exec needs to show some real innovation beyond the exclusivity play in order to make it more attractive to investors.

“There is a real need for innovation in the way that executive recruitment works,” said Suster, who added that niche online recruiting has already been mined by companies like Doostang and TheLadders and that Ivy Exec needs to create a platform that “dramatically improves recruitment quality and lowers costs” in order to raise VC money.

“Hiring managers don’t want to pay the traditional 33 percent compensation model of the past,” said Suster, who feels the solution lies in a new kind of social media site beyond what LinkedIn and Craigslist are doing, as neither addresses the problem of sifting through thousands of applications. “Somebody is going to create a better way to recruit through social networks and this company will likely make a lot of money.”

Suster said Bajic is better off asking for less and hitting up angel investors for $500-750,000, which should create more opportunities down the line to raise larger amounts of capital. “If it stays small they can still run a nice business with annual profits that get returned to shareholders. If they find a source of rapid growth and true innovation then they can always raise VC money later on.”

tim-berryTim Berry, founder of Palo Alto Software and an adjunct professor of entrepreneurship at the University of Oregon, said Bajic should stay away from investors all together and focus instead on doing what she’s doing and growing more organically. “This is one of those cases in which the old watch-what-you-ask-for-because-you-might-get-it motto holds true.”

Berry said that due to Ivy Exec’s elitist business model, which by nature shrinks the revenue stream, it’s hard to imagine a way for an investor to get a significant enough return on their $1.5 million, without them demanding a sizeable chunk of equity in return. Berry added that this scenario would likely not help Ivy’s future growth.

According to Berry, an investor would likely expect a return of $15 million on that kind of stake, and assuming they get half the company, would need Ivy Exec to eventually become a $30 million business.

“I like what they have now very much, except the need for $1.5 million to be ‘blown’ in marketing attacks the credibility of what they now have,” Berry said, pointing out that with 25,000 members each paying at least $20, that’s $500,000 in revenues for Bajic without changing anything. “Ivy Exec is in danger of turning the golden egg of an attractive small business, with a great niche and good focus, into a mushy and limp and less likely attempt at something a lot bigger.”

Do you agree with our experts? What do you think about Ivy Exec’s business model and founder Elena Bajic’s attempt to raise $1.5 million to grow her company? Would you invest? Post your comments below:

11 comments

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I agree with Tim Berry.
The natural growth of the small business will be be far more profitable for the founders than seeking a cash injection for which they are may sell their future.

Posted by George Visan | Report as abusive

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This is a great venture concept. We would be interested in blending our latest offering the “Quality Certified Candidate ™”. This offering puts the candidates reputation ahead of the resume with a candidate reputation scoring model designed to improve ROI by focusing on candidate to role alignement rather than the age old model of resume/skillset submissions. Our candidates receive a reputation score that can be requested by a client in addition to the standard provisions. Our scoring model improves successful candidate selection by ensuring the history of each candidates contract success rate.

This will be the latest industry standard for candidate selection.

Please contact me as I think our product line may work well together.

I’d be curious to know what they believe the size of their market is. As a techie, once I had advanced to the point where I might have been in their target audience, I was already at the point where the jobs came looking for me, rather than the other way round.

So I guess in practice she’s looking at run-of-the-mill middle management. Is there any demand for a new way of recruiting them?

Posted by Ian Kemmish | Report as abusive

Good luck. Competing against already established niche players like The Ladders, and trying to edge into already influential social networks’ domain seems like a pie-in-the-sky, me-too-with-something-shiny-attached, concept doomed to wither on the vine.

I suspect any money she does raise will likely come from Ivy peers who can afford to kiss the funds goodbye.

Posted by Worth79 | Report as abusive

I think it’ll go downhill as features like “featured candidate” and stuff start showing up. Just like dating sites that charge fees for more prominent placements, further diluting the pool. It goes back to who has the most disposable income, not who the best candidate is and that’s the wrong way to go.

Posted by Marceau | Report as abusive

Ones to watch are MessagingCareers.com they also own ExchangeCareers.com, BlackberryCareers.com and SharepointCareers.com.

Niche area job sites will be the way to go instead of being lumped together like cattle. People find it annoying when they get contacted from fields they dont specialize in but get job offers because they match a key search.

Not sure if the snob appeal will provide long-term results. As someone mentioned, this type of career database seems more appropriate for someone just starting out or in low to mid level management, because senior management are already in niche industries and have established relationships and reputations, which means ofers knock on their doors. In addition, there is much to be said about the flip side of Ivy exclusivity, it proposes that, even though resumes are checked, that these candidates are the best and completely dismisses those professionals who may as qualified or more, but simply didn’t attend an A level school. Trust me, not ALL Ivy leaguers are that capable or that smart (worked with enough of them whose pedigree aided in their schooling more than their abilities)- -in the real world intelligence counts, experience counts, personality counts, and each and every one is not exclusive to ONLY Ivies…

Posted by aguilar.giovanna@gmail.com | Report as abusive

This will most likely attract mediocre or desperate candidates. For people that have good skills it’s easier to just look for jobs on existing job boards, or search Craig’s list. Going through an extra obstacles of interviewing an intermediate party and paying extra money seems silly in this age, considering how many other alternatives are there.

Posted by rob | Report as abusive

i Believe it’s a real great concept. Way to Go Ivy!

Definitely an interesting concept. The \”old\” model, of course, has been to charge employers for posting jobs and then to generate massive numbers of pageviews from job seekers in order to maximize advertising revenue. With candidates making up the bulk of the visitors/pageviews to sites, I can definitely see how \”exclusivity\” would be valued. The concept plays out best for this particular market (executive jobs), as I don\’t think it would work too well with lower-end sub-markets. Still, it will be interesting to see how this plays out, and how many job boards follow suit of charging candidates to \”belong.\”

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Posted by Christopher Terce | Report as abusive