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How startups recruit, hire and retain software developers

Coding Sans, a software development company, released its State of Software Development at Startups survey looking at 126 tech workers at startup companies. Of those polled, 35% cited hiring talent as one of the "biggest challenges in software development," and 90% expect the demand for software developers will only grow in the next five years.

The survey also uncovered some interesting tactics startups use to compete with bigger, more established tech companies. Here are seven realities they've uncovered about hiring software developers at startup companies.

Most efficient hiring methods

When startups hire software developers, 35% rely on employee referrals, 30% use professional networks and only 13% said they rely on recruitment agencies or headhunters. Hiring people from your network or candidates referred by a current employee helps bring some certainty to the process.

"When the referral is being made by someone who knows both the candidate and your business' needs, there's a much better chance that that the match will be a good one," said Travis Bloom, senior front-end engineer at Rocketrip website, a company that provides travel software for businesses.

And when an employee is referred by a current employee or recruited through a professional network, Bloom said it's easier to get them on board, "since the employee who made the referral can answer questions and give a detailed look at what life inside the company is really like."

Most important hiring criteria

For startups, technical skills aren't the most important hiring criteria. Instead, 69% cited work experience as the top priority in hiring, followed closely by cultural fit at 60%. Less than six percent cited a bachelors or master's degree as a key hiring criteria.

Startups are built on small teams so hiring someone who fits well into the company culture can be more important at a startup than a larger organization.

"It's hard to work around a dysfunctional team dynamic when there are only a handful of people on the team," said Bloom. And in the fast-paced world of a startup, the last thing you want are delays over office politics.

How startups lure talent

Startups are at a hiring disadvantage when competing against large corporations that offer competitive salary packages and only 10% of startups said they rely on high salaries to woo software developers. Instead, startups lure talent with interesting and challenging tasks (79%), a strong team and corporate culture (64 percent), flexible hours (39%) and remote work (28%).

Erick Tai, co-founder and head of engineering at Reflektive, a company offering performance management software, has first-hand experience luring an engineer away from Twitter. Tai asked what the candidate's career goals were and when the candidate mentioned a desire to learn more about scaling, Tai emphasized how he could learn that and more at Reflektive.

"I sat down with him and wrote what his resume would look like in two years. It led him here, and I'm proud to say that he accomplished that two-year milestone in just one year," he said.