Why a Mentor is as Important as Investor for Startup
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Hundreds of young people are entering the startup ecosystem. It’s a flood of such companies and activity. The whole country is coming up with new ideas for products and service. Either they are new products, new services, or even new ways of doing the same things. Money is no longer an issue. HNIs are funding start-ups, Indian investor companies are looking for post-initial funding, and then there are the large Investors for a later stage. The country is awash with funds for start-ups. The problem is most start-ups are set up and run by young and inexperienced men or women. They have not faced real-world problems in business. There is much more to a company than just its products or services. Even top-flight companies like Google and Facebook brought in professional managers to keep the show going smoothly. The Start-Up promoters mostly focus just on their idea. Running a company needs experienced hands, It needs someone who has been through all the government issues, the give and takes of business, the ups and down, must be able to anticipate in advance what is right and wrong at work decisions.
That’s where the role of a mentor comes in. Every start-up must hire a person with adequate company experience, especially understanding of government policies and regulations, tax issues, long term effects of entering into business to business agreements, and also day to day decisions. Often agreements hide issues which an inexperienced hand does not understand as long term pitfalls. Investor agreements must be whetted very carefully, especially exit terms, controls given to investors, management decision rights to all parties concerned.
Day to day working also seems innocuous in certain areas but hit badly later. The mentor can be either an employee or a trusted consultant. An employee at this level of experience may not be affordable for a start-up at initial stages, but that’s when most mistakes are made, so a consultant can be a trusted advisor too. The right Mentor would help grow the company in the right direction and avoid pitfalls. It’s so much easier for a start-up team to focus on their work when they have someone looking after the larger decision making. Running a growth-oriented company is a process by itself, not snap decisions. An advisor from outside will see things differently from the day to day management so brings in a new perspective.
Types of Mentors
Mentors are 2 types. One is a tech guy who would help directly in product development with his or her external experience, and the other is a general manager of the business. Each brings his own expertise. One has to decide which is more needed for the company. Mentors also guide the Board of the company as well as their investors. The investor will rely on the suggestions of Mentors. The company should be totally transparent to both Mentors and Investors, whether there is good news or bad. In fact, bad news must be told first. It’s more important that all concerned parties are kept in the picture of every change.
Look out for the right mentor soon as you launch your startup.