The Importance of Mentoring in Entrepreneurship
April 28, 2022
Success in entrepreneurship is hard: nine in ten startups ultimately fail. Entrepreneurs can improve their odds by seeking skilled mentoring relationships with seasoned professionals.
Entrepreneurship is not for everyone: it requires a robust tolerance for risk, responsibility, and hard work. Facing persistent and profound challenges, the entrepreneur benefits greatly from any and all support. That's why a reliable mentor can figure among their most valuable assets.
Mentorship doesn't occur in a vacuum, though. It takes a structured community to encourage and nurture mentors who can guide the rising generation of entrepreneurs to success. That's one of the purposes of Michael Goldberg's Beyond Silicon Valley: to help create a global network of entrepreneurs and mentors. Launched as a Massive Open Online Course (MOOC) in 2013, Beyond Silicon Valley has grown into a small enterprise that includes a podcast and a book (which you can download for free).
In the book, Goldberg focuses on three pillars of mentorship: anchor institutions, entrepreneurial ecosystems, and access to capital. This article describes these pillars and more. We'll discuss:
- The role of anchor institutions in mentorship
- Mentorship through entrepreneurial ecosystems
- Access to capital and mentoring
- Mentoring entrepreneurs through online learning
The role of anchor institutions in mentorship
Anchor institutions are long-standing establishments that, as the name suggests, are 'anchored' to their region of origin. These institutions serve as foundations of their local economies and a source of ideas, talent, and innovation.
Anchor institutions include universities, hospitals, museums, and large, established corporations that have weathered myriad changes. These establishments boast a large reservoir of resources with great potential to fuel entrepreneurial dreams. Many areas with transitioning economies have access to anchor institutions that, when optimized, can cultivate budding entrepreneurial talent by housing mentoring programs.
Goldberg discusses how important these spaces can be for regional economies. He gives the example of Case Western Reserve University, Ohio, which received $377.9 million in research funding in 2015-2016. While this funding pales in comparison to that received by top-ranked universities like MIT and Stanford, it can nonetheless serve as a potent catalyst in the community surrounding the university.
How anchor institutions stimulate entrepreneurship
Without the research conducted by anchor institutions, a valuable startup might just end up a discarded idea. LineStream Technologies, a software embedding company that spun out from Cleveland State University, started as a research idea at the Cleveland State University Research Lab. The technology behind the company remained unnoticed in a CSU lab for 12 years. Then a venture fund, in partnership with state bodies and foundations, helped fund commercial applications. LineStream subsequently signed a major licensing deal with Texas Instruments.
Commercializing research capabilities
Anchor institutions generally have excellent research capabilities and can generate support for early-stage companies. However, while universities can drum up transformative mentorship support for idea generation and primary research, they tend to perform less effectively in the area of commercialization. Once the idea has been generated, it needs to incubate and develop further with the nurturing of potential mentors specifically skilled in entrepreneurship. Even revolutionary ideas need business models optimized for success in the real world. If effectively mentored, the ideas and talent housed within anchor institutions can realize their commercial potential instead of wasting away.
Goldberg illustrates this with the example of the Global Cardiovascular Innovation Center (GCIC) of the Cleveland Clinic. Half of GCIC's funding is dedicated to supporting innovation and new company formation. Such initiatives create a self-sustaining economic ecosystem within a region. In turn, these entrepreneurial ecosystems form a mentorship network that gives birth to breakthrough ideas and innovations, draws talent to the area, and supports job creation.
Mentorship through entrepreneurial ecosystems
An entrepreneurial ecosystem is a highly adaptable model that can look different in every region in which it exists. What these ecosystems share in common is that they make use of anchor institutions, intermediary organizations, innovation projects, and incubators to create entrepreneur-friendly conditions. Good mentorship—fostered through opportunities for networking, especially within incubators—provides the foundation for such an ecosystem.
Networking and incubators
Building a network is critical for innovators around the globe. Fabulous Fempreneurship, a Facebook community built by Beyond Silicon Valley mentor Elaine Slatter, is one such network. It connects female entrepreneurs worldwide on an interactive platform to open up possibilities for women-owned businesses. Startup incubators play a similar role in linking entrepreneurs with mentors who can advise businesses on growth and scale. Mentors can leverage their networks to connect young entrepreneurs with vendors, customers, and sources of capital, driving significant value for these new businesses.
MicroMentor is an entrepreneur-mentoring solution that acts as a network and an incubator. This free online community of volunteer business mentors and entrepreneurs democratizes access to mentoring services and levels the playing field for entrepreneurs of all backgrounds. Components like this build what Goldberg calls an 'innovation ecosystem.'
The innovation ecosystem
Building an innovation ecosystem can make mentorship systemic. It is not a short-term project; collating a wide variety of valuable but disconnected resources and rehoming them within an innovation ecosystem can take up to 25 years. It requires consistent effort over time to build programs for entrepreneurs. When successful, it offers everything from business development training and seed capital grants to increased access to follow-on capital for scale.
Developing the Innovation Center of Pristina, Kosovo, was a valiant first step in creating a formal entrepreneurial ecosystem to provide support in all its forms: through mentorship, training, access to capital, and provision of facilities to startups.
Access to capital and mentoring
For entrepreneurs, access to capital is an essential component of innovation ecosystems. Startup capital can be harnessed through a variety of sources, like seed accelerators, angel investors, and venture capital funds. Mentors can help entrepreneurs understand how to approach and navigate conversations with investors and funds.
Seed accelerators are cohort-based, mentorship-driven programs that run for a fixed time. They offer startups access to talent, business development partners, and follow-on investors. They take equity in these companies In exchange for the mentorship, training, and support they provide. Owning a stake in their portfolio companies incentivizes accelerator programs to help these startups succeed. One of the most renowned seed accelerators globally is Y Combinator, a privately held organization. In transitioning economies, seed accelerators may be partially supported by donors or the government.
When entrepreneurs need additional investment to grow and scale their business, they may turn to angel investors. Angels are wealthy individuals who invest personally or through organized angel funds. They may even be successful entrepreneurs themselves. Angel investors make their investments from personal funds and with a long-term view since investing in startups is an inherently risky proposition, given the high failure rate.
Angel investors often want to contribute to their communities by fostering entrepreneurship. Since their motives are partially altruistic, they make for great mentors. With their vast networks and business expertise, they can facilitate opportunities that would otherwise be unavailable to young entrepreneurs. Being financially invested in these startups also aligns their incentives with the entrepreneurs' business success.
Venture capital funds
Formally structured around 'other people's money,' venture capital funds are a common and systematic way for entrepreneurs to gain access to capital and mentorship. Burgeoning local venture capital options help entrepreneurial ecosystems grow and thrive.
Traditionally, VCs have preferred investing in startups in their geographic region, a situation that promotes mentorship and governance oversight to their portfolio companies. The rapid globalization of business in our increasingly connected world has altered conditions somewhat. Venture capital now increasingly seeks great investment opportunities around the globe.
The author of Beyond Silicon Valley, Michael Goldberg, is also the co-founder of the Bridge Investment Fund, a venture capital fund focusing on investing in Israeli medical device companies with connections to top healthcare institutions in Cleveland.
Mentoring entrepreneurs through online learning
Today, entrepreneurs are spoilt for choice, with various opportunities to access mentorship. Online communities and e-learning are one such conduit for knowledge about entrepreneurship and connections with relevant mentors and successful entrepreneurs around the globe. Mentoring relationships existing on online communities and social media channels like LinkedIn can be effective for entrepreneurs who want to reach out to their mentors more frequently to seek business advice about their entrepreneurial journey.
Mentorship indisputably offers immense value to entrepreneurs. With the internet providing a powerful, democratizing force for entrepreneurship, people who own businesses can accelerate their entrepreneurial pursuits by plugging into a global network and accessing mentorship in all forms, from connecting with strategic angel investors to taking online courses.
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