Mentoring for startups is now an international phenomenon. Today my Google alert for “mentoring startups” delivered a very worthwhile article for anyone contemplating entering a mentor program. North West Startups Struggle to Navigate Investment Landscape by Patricia Keating of Tech Manchester (England) highlights a couple of areas where startups say they are weak and where mentoring can help: raising capital and managing HR functions.
An in-depth survey of tech startups and mentors in the North West reveals that many of the region’s new businesses lack knowledge of how to raise investment, with less than a fifth saying they feel confident doing so.
Findings showed that just 19% of startups felt they had good knowledge or confidence in raising investment at the beginning of the 12-month programme, although this rose to 58% by the end.
More than 50% of startups felt they lacked knowledge and confidence in ‘creating a pitch deck’ and ‘pitching’ at the outset.
Tech Manchester is an organization that helps support tech startups. Their report “details the journey of 86 mentor/startup partnerships within its mentoring programme, measuring levels of confidence and knowledge among startups at the beginning and end of the programme.” It certainly would be helpful to see a similar study on U.S. based mentoring programs like TechStars or MIT Venture Mentoring Service.
Tech Manchester director Patricia Keating said: “We saw the biggest increases of knowledge and confidence in raising investment and pitching to investors. Speaking from experience, the language around investment can easily exclude people who haven’t encountered it before. We’ve shown that you can have a significant impact with a few lessons on how to approach investment and pitching.
This jibes with my years of experience at MIT VMS and the MIT Sandbox fund. The startup that doesn’t ask for help raising capital is by far the exception. Yet founder’s knowledge and experience with investors varies widely, with the majority of first time founders lacking any experience at all. Many have the dangerous idea that they are “giving a way a chunk of their business” in the words of Patricia Keating. I teach my mentees that they are selling their equity in return for capital to finance their business – they aren’t giving away anything!
But investing wasn’t actually the weakest knowledge area of Tech Manchester’s founders, that area was managing people.
Keating added: “A large proportion of founders have never managed people or been party to HR processes within their previous roles, so it remains the most significant knowledge gap among startups. Through the programme we ran sessions on making a first hire and best practice in recruitment, onboarding and people management, bringing the percentage of startups that were confident in HR from 13% to 45%.”
Coincidently MIT VMS announced a new HR workshop for its founders, run by Calvin Aird, senior VP of TJX company.
The article concludes with a testimonial from a mentee in the Tech Manchester program:
“I didn’t know anything about the different investment pathways when I joined Tech Manchester. The process of getting funding can be expensive and it’s difficult to know who to trust, so it’s critical to have an impartial third party to give advice or recommend others who can help.
“It’s clear that there is a knowledge gap around the different funding options, but being in the mentoring scheme gave me the tools and knowledge to understand exactly the type of investment my business needs to target to move forward.”
When I mentored at Social Innovation Forum I was struck by how one of my founders evaluated the success of her financial literacy program for inner city entrepreneurs: she measured their confidence in their financial knowledge both before and after their participation in the program, showing a major increase in confidence of these first time entrepreneurs. This is a very simple, but effective way to measure the impact of programs conducted for entrepreneurs.