A while ago I added government regulations to the four areas both founders and investors now need to examine in order to judge if a startup is investor-ready (team, market, product being the other three).
So I was interested to read the sub-title of the article on Entrepreneur.com Why a Mentor is as Important as Investor for Startup: 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.
Government regulatory issues as they affect a startup are something you don’t want to be learning on the job. Before you start a venture the founder needs to ascertain whether federal, state, local or even international government regulations will affect his venture. That’s where experience can be valuable, as this short article about the importance of mentorship points out.
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.
The article about the value of mentoring comes from Entrepreneur India, not U.S., as you might think. Clearly mentoring startups has become an international phenomena. The author, Vikash Mittersain, Chairman and Managing Director- Nazara Technologies Ltd., writes that there are two types of mentors: technology/product development and general management (that’s me!). I agree with this as far as it goes, but it doesn’t go far enough. At MIT VMS many startups also need domain expertise, whether that be in retailing, manufacturing, medical device or education (that’s me again.) Domain expertise can’t be limited to technology. In fact, many ventures come to VMS with technology advisors already; they need help with business problems, not technology problems.
Interestingly, in India evidently mentors also guide the Board of the company as well as their investors! That’s a scope far beyond most U.S.A. mentoring. Vikash Mittersain advises founders to start looking for the right mentor as soon as you launch your startup.
Again, I agree with the statement as far as it goes. At VMS we provide founders with a team of mentors and encourage them to add mentors as their needs demand.
Finally Vikash makes a great point about a startup’s needs:
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.
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.