If you're an early stage company -- or if you have clients in new technology ventures -- you know that resources are often meager, but the need for expertise is large.
While the founders of technology companies are often skilled in their core technologies, mentors and advisers can provide impartial assessments of a company's technology or recognizable industry validation. And although many management teams are grown through sweat equity, developing business mentors and advisers can be a cost-effective way to navigate the perils of the startup period.
Crafting a mentoring relationship, however, is no guarantee of success -- either for the company or the adviser -- without a few guiding principles.
So, you need a mentor.
It's important for the entrepreneur to consider all of the following issues before deciding to assemble either an advisory committee or to seek a mentor:
1. Am I coach-able? Are you actually willing to surround yourself with smart, experienced people and act on their advice? If you're committed to being super-CEO or you are sure you have all the answers, this strategy is not for you.
2. What do I need? Before you go seeking help, make sure you have honestly assessed the gaps in your knowledge and experience. Have you grown a company in a similar market? Do you have deep connections with venture capitalists or experience in launching a bootstrapped venture? Do you understand the ins and outs of human resources, accounting, facilities management and production scheduling? Once you have considered your strengths and weaknesses -- relative to the goals of this business -- you will want to find someone, or a team of people, who can augment your background and bring critical skills to your enterprise.
3. How can a mentor or adviser add value? Have you decided to develop and manufacture your new products, or will you partner and outsource production? Will strategic marketing alliances help you generate sales -- and bring early credibility? Do you need to validate your science or develop a strategy for licensing your intellectual property? Or do you just need a seasoned CFO to organize your financial operations? There is no right answer to these questions, except to say that mentors or advisers may enhance your strengths and serve as a buffer -- warning against pitfalls which, based upon their experience, can be predicted.
4. How will I compensate my advisers? If you are bringing a business angel into the company who will be investing either time, money or both, you would generally design an equity relationship. You may want to accrue contract fees or offer a combination of cash and equity. It may be that your goodwill is sufficient, or that being engaged in your company offers your mentor a platform for increasing his or her visibility in an industry. It is important, however, that your compensation plan is designed with an understanding of the legal issues involved and won't become a deterrent to future financing. This is not a project to do solo -- make sure an attorney looks things over.
5. Where will you find the right people? The San Diego community is rich in resources and networks. There are numerous industry associations, chambers, professional societies, angel and mentorship groups as well as legal and accounting firms that can help you identify some prospects. The Regional Technology Alliance Web site (www.sdrta.org) is a good place to start.
Before you accept an invitation to support a startup, ensure that a framework of accountability is in place.
1. What are the expectations? As a mentor, are you working for the pure pleasure of the entrepreneurial challenge, do you expect to become employed or garner some investment benefit once this business gets going? Since the mentor will be the senior leader in the business process, you may want to make sure that expectations are clear and mutually beneficial. It will be up to you to ensure that ongoing business operations remain consistent with the initial commitments.
2. What is the likelihood of success? While you may be flattered to be invited to serve as a mentor, it may be incumbent upon you to guide this team to victory. You may want to do some due diligence on the industry, the market opportunities and the technology. How well do the founders really understand the value of their technology or the market for their proposed products? Are there skeletons in their closets or vastly exaggerated assumptions that will threaten the venture down the road?
3. What are the critical milestones? Have you and the founder looked carefully at the product and business development milestones and determined that they are realistic? Have you established a process of communications so that unmet milestones don't slip away?
4. What about business development? Technology company founders can be more comfortable in their laboratories than out in the marketplace. Have you established roles and responsibilities for performing market research and acquiring your beta customers? Has a business model been crafted to get early customer feedback incorporated into the growth strategy? These are generally the issues that advisers can address from experience, and are a key component of their added value.
Finally, the mentor and founders will have to find a working style that makes sense all around and is in keeping with reaching the stated objectives. Whether it will be daily office tasks, weekly conference calls or an ad hoc advisory process, setting the right framework can be a strategic advantage for a startup.
Orion is president and CEO of the San Diego Regional Technology Alliance. She can be reached at firstname.lastname@example.org.