Mentoring and not just 'Moneytoring' Vital for Balanced Startup Ecosystems
Both entrepreneurs and ecosystem developers often regard money as the key driver of success. A large number of young innovators spend more time in raising funds than implementing their business plans. Governments and policymakers find it easy to create funds to boost startup economy. Recently, the government of India announced INR 10,000 million fund for startups in addition to its earlier INR 100,000 million Fund of Funds for Startups (FFS) announced in 2016. Unfortunately, after three years of its launch, only 163 startups are reported to have benefited from FFS, while the allocations and disbursements are way below targets. Pumping money need not always boost startup economy. It may even have negative effects. For example, way back in 2006, when 90 per cent of about 21,000 startup applicants were provided easy seed funding support by Malaysian government to boost entrepreneurship among indigenous Malays, the disappointing results are attributed to the very funding program as the “loose funding” made Malays less capable and the inhibited entrepreneurship among them was owing to lack of risk-taking. On the other hand, there is plenty of evidence from mature ecosystems of the positive role of mentoring in both the venture performance and founder development.
Evolving ecosystems like India find that a large number of young entrepreneurs join the startup bandwagon, but almost 90 per cent of these startups fail in the first five years. VCs attribute startup failures in India largely to inexperienced founders. Mentors contribute to the startup success by providing inspirational, psychological, advisory and assessment related support. First generation entrepreneurs starting with innovations neither have the experience nor the support of previous generations that is seen in traditional family businesses. Thus, in the innovation-led entrepreneurship context, mentoring is found to impact significantly in terms of influencing entrepreneurial intentions and actions, increasing performance, survival and the likelihood of success.
Incubators and accelerators in emerging ecosystems like India have limited understanding of mentoring. Entrepreneurs frequently become victims of abuse instead of benefitting from it. For example, there are a large number of self-designated “professional” mentors who charge hourly fees without any commitment, demand stake and disappear, steal ideas or end up misguiding inadvertently. It is, therefore, important for incubators to follow mentoring management practices rather than merely assigning an individual to a startup.
There are various types of mentors that may help startup founders like process experts, skill experts, domain experts and investment experts. Each of these experts may take various mentoring roles such as that of a main mentor, an expert mentor, an instructor, a business service partner, a deal flow screening partner or a demo-day judge. Beyond the types of expertise and roles that mentors play, the mentoring process itself demands attention. This may include the nature of interactions in terms of frequency, one-to-one or one-to-many and style of mentorship in terms of levels of directivity and involvement. Different mentoring roles demand different kind of interactions and mentoring styles.
Apart from appreciating mentor types, roles, nature of interactions and mentoring style, which help in identifying mentor-mentee fit and facilitating the mentoring process, mentoring management also requires efforts in identifying mentoring focus and coordination of mentoring efforts. Incubator managers need to have mechanisms to monitor founder development and startup progress to decide appropriate focus in terms of learning and/or performance. Coordinating multiple mentoring relationships is another area that requires attention from incubators, which go hand in hand with monitoring and evaluation in light of larger goals the incubation program.
Building Mentoring Infrastructure
While funding infrastructure for startup ecosystems is critical, balanced development of an entrepreneurial ecosystem demand equal focus on mentoring infrastructure. The likes of Tarun Khanna from Harvard Business School, who is involved with Indian startup ecosystem through NITI Aayog, have emphatically voiced that mentoring of entrepreneurs is completely missing in India. Although this is understandable in case of emerging ecosystems, systemic interventions focused around mentoring are essential.Due to its dynamic nature, startup ecosystems in general have limited shared understanding on mentoring practices compared to what may exists in case corporate mentoring in large organisations. It is, therefore, critical to build a knowledge system of mentoring best practices, may be through a digital platform for various incubators and accelerators to tap into. This may be actively promoted for its use by the easy-to-access design and awareness building programs. Apart from documenting and circulating best practices, mentor data bank is another key element of mentoring infrastructure. Systematic identification, screening, classification and rating of mentors at an ecosystem level towards this can go a long way. Further, it is not sufficient to just build a database of mentors for sourcing mentorship. It is equally important to have programs to improve quality of mentorship. Mentoring the mentor workshops play a crucial role as the strength of mentor-mentee relationship is not about the expertise alone, but also about the confidence, commitment and compatibility. Training initiatives in partnership with management departments of universities for mentors to hone mentoring skills and help appreciate the science of mentoring may also contribute to improve the quality of mentoring. ‘Super Mentor’ — a start-up dedicated Q&A platform backed by expert system can also be envisaged to fill the void of mentorship talent. Apart from all these, attempts to introduce celebrity mentors that inspire budding mentors need to be more systematically pursued through inter-ecosystem dialogues and internationalisation.
It is important to recognise the role of these so called “mentor capitalists” apart from the venture capitalists in the ecosystem. Be it a startup, an incubator or a national ecosystem builder, to make the startup ecosystem more rewarding, each one needs to look beyond “moneytoring” and benefit from mentoring.