You are extremely familiar with your business model as a…
The very reason that you are an entrepreneur is because you like to “Question”. What is that one problem in the market which you can solve better than anyone else? What new can you innovate? Question why you should stick to a full time job? This web of questions is what pushes entrepreneurs to take the leap of faith with their big idea. Once a startup jumps into this vibrant ecosystem of entrepreneurship, there is a new challenge every day and decisions have to be made fast. Mistakes have to be corrected even faster.
As an early stage entrepreneur, one is bound to have multiple questions on starting up. This is where the role of a mentor or an advisor steps in. He/she gives answers and guides startups on the right path and makes them see opportunities that one might have been blinded to. The flip side of being a leader of the pack in a startup is that as an entrepreneur one might presume that one is not answerable to anyone, but this is not true. Remember, the role of a mentor is also to be the devil’s advocate who tells you that you need to grow a little more to be the ultimate big boss.
The two terms i.e. mentors and advisors are often confused with each other, simply because some characteristics overlap. A startup goes through different stages and it needs the help of both mentors and advisors for different situations.
The role of mentors is most crucial in the first 12 months
Mentors are the guiding forces who step in the decision making process of a startup from the inception of the idea. The role of mentors is most crucial in the first 12 months of a startup as a company goes through maximum experiments during this period, and makes numerous changes in its business model, especially, if a startup is entering a new industry, sector or a market it has not been exposed to in the past. Mentors, who normally have gone through the process several times themselves are familiar with the mistakes startups make at initial stages and red flag it and support whenever needed.
A mentor brings in domain expertise and an understanding of the consumer market which a startup wants to tap. Mentors can be experts in different areas as some may give sound advice on entrepreneurship, others might be specific industry specialists or may be the go to people for sound financial or marketing advice. They also may bring great networks with them. This means that one needs two to three mentors with varied proficiencies. However, it is also advisable to not have mentors beyond three to four because they might have conflict in their ideology and an entrepreneur could get confused.
It is just not the technical or transactional benefits that a mentor brings to the table. A mentor is a person who engages at a personal level and helps you sail through your learning as an entrepreneur. The early days of a startup are not easy and filled with ups and down. Many times you are not prepared for the downs. As a leader, you cannot afford to lose hope because the team is looking up to you for guidance and the larger vision. There will be times when you might be demotivated and the vision might blur. In situations like these, a third person perspective from a mentor brings in faith and tells you that there is light at the end of the tunnel. He/she tells you to buck up and inspire your team. When you are too close to an idea or project, it is difficult to analyze its pros and cons. He/she is the one who shows you both sides of the coin. A startup from Bangalore, India who did wish not to be named said,
I am now working on my second business idea and this time under the guidance of a mentor. The journey is much smoother than previous time. The first time, more than understanding the market, I needed a person who could tell me that it is okay to fail, it is fine if I make mistakes. It is perfectly fine if your dream project is not what you thought will be. There is always a way out, to start fresh.
How to find mentors
The best way to find mentors is to reach out to your existing network first and bring in people that you have worked with in the past. They could also be family or friends. In most of the cases, mentors come on board on a goodwill relationship, without a fee. A startup must understand that seeking mentorship is a two way process and communication. A mentor should feel that he is adding value to his network as well if you as an entrepreneur is guided and mentored under his wing. Identify some areas in which the mentor can rely on your knowledge and expertise, it could be technology or financial expertise.
There are also scenarios when startups want to make the relationship with the mentor formal and that is the time one must be extremely careful and wise. As an early stage startup, you do not want to lose on your equity for activities that are not getting any direct capital to your company. In case you decide to give equity to mentors, it should be in the range of 1.5 percent to 2.5 percent spread over two to three mentors. A lot of times, mentors are also angel investors or vice versa. They first mentor and then decide to invest in you or they angel invest and mentor you in the process. In a nutshell, the relationships with mentors have different permutations and combinations depending on the understanding between the people involved.
How the role of mentors changes as the company matures
As the company keeps maturing, the role of mentors becomes more defined and lesser involved. Within 12 to 18 months, startups usually have 15 to 20 people, structured roles for employees and the market is broadly understood by them. Arpit Agarwal, Principal at Blume Ventures, a leading angel fund in India tells us, “In my experience, over a span of 18 months my involvement as a mentor in a company declines from 1/2 day a week to one hour a week. This means reduction to one fourth of the time that I used to spend initially, when the business idea was just born.”
Once the company has crossed the stage of 12 to 18 months, it is time that it could get an advisor on board. The main difference between advisors and mentors is that advisors are very specific in their roles and areas. The reason is simple. A startup at this stage has gone through the initial hiccups and it is time to know where exactly the gap is. You move from general advice to only specialist advice. It is a stage where you might not seek advice for every small problem, you have gained experience. Advisors usually have a stake of 0.5 % to 2% each and a company could have three to four of them at large.
While you are looking for a mentor or an advisor, the common thing should be to value yourself as an entrepreneur and offer a relationship which motivates the mentor to help you as much as he or she can.