All the year-end wrap-ups have inspired me to do a wrap-up of 2018 from the viewpoint of a mentor. Here’s a few observations:
- Engineers continue to dominate the founders group – not surprising as MIT is a technology institute after all. However, I see relatively few Sloan business school students. Occasionally they are brought on to a startup team, but I see very few Sloan founders.
- Many one and dones. I do a lot of first meetings and for a variety of reasons these would-be founders never schedule a second meeting. Some realize that their idea isn’t really venture-ready, others decide they aren’t cut out to be entrepreneurs. Perhaps a few decide that they don’t need mentoring or find it elsewhere.
- The rate of new MIT-affiliated companies continues to rise. This data may be confidential, so I won’t share it here except to say that I’m doing more first meetings than ever.
- Sales still gets short shrift with new ventures. Almost never do I see a sales person as a founder or co-founder. The founders I do see don’t put a lot of thought or effort into customer acquisition. Typical teams have CEO, COO, and VP of bus dev – no sales, marketing or finance executives! Perhaps as these companies grow they will realize the importance of sales, but early stage companies are virtually all product-driven.
- A large number of startups are social impact ventures. I’ve even seen a few non-profits (501c3 companies) for the first time. It’s admirable that the vast majority of founders are not wannabees, nor focused on trying to get rich quick. To the contrary, most are working to make the world a better place – very inspiring for mentors.
- Mentoring continues to be popular. Several new mentors this year and very few leave, usually because they are relocating.
- Developing pitch decks is SOP for founders. Very rare to see a new venture without a deck. Unfortunately many fall into the same PowerPoint-driven trap of being text-heavy, bullet point-laden and better designed to be read than as an aid to presentations.
- I catalyzed a new program for MIT VMS – pitch scrubs on demand. I don’t have any data on how popular this new service is, but I was pleased to see how quickly the idea was pursued.
- Founders continue to ignore founder’s agreements. Deciding who gets how much equity is not a pleasant task in a startup. Obviously it’s a zero-sum game. However, mentors are very good about reminding founders of the necessity of forging a founder’s agreement early on to prevent problems or misunderstandings down the road.
- Too many founders are fixated on raising money, not acquiring customers. Most will find that they are far from venture capital ready. The rule of thumb for VCs is that they are looking for grand slam home runs – companies with a billion dollar market cap. That usually translates into yearly sales of $100 million or more and a hockey stick growth rate. I’d like to see more founders realize they have something to contribute but since they don’t fit the traditional VC model either licensing their tech to another company or selling it outright. Only a tiny percentage of startups reach unicorn status, just like very few baseball players make the major leagues. That shouldn’t discourage entrepreneurs.
- The best source of financing continues to be customer revenue. I’ve been glad to see a few bootstrapped ventures. Generally the founder/CEO of these ventures has real sales ability to accompany their technical chops. A very rare combination!
- This year saw a strong interest in incubators and accelerators. MassChallenge dominates the New England accelerator scene as it continues to grow in size and influence.
- Mentoring has become SOP for startups, though many may look to their investors, their professors or other sources of mentoring than formal organizations.
- Virtual mentoring continues to be a non-starter, as the very few instances I come across are aimed outside of the entrepreneurial world, mainly for students or minority groups. There seems to be no substitute for face to face mentoring sessions for founders.
While this has been a challenging year for me personally as I had to stop mentoring at the MIT Sandbox fund due to health problems it’s been a rewarding one psychically. Helping entrepreneurs succeed is fun as well as rewarding.
Boston continues to play second fiddle to New York and Silicon Valley. The local politicians refusal to do away with non-competes will continue to handicap us. Not that doing so would magically turn Boston into the hub of entrepreneurship, but it would result in more spin offs from existing companies, which is the life blood of new ventures.