Software developers David Lifson, Chris Maguire, and Haim Schoppik had plenty of experience writing code when they conceived Postling, an online service to help small businesses manage their social media presence in 2009. They planned to perfect the site before asking potential customers to use it, but their mentor, Ellen Thompson, forced the programmers to leave the office and talk to business owners.
The trio, all veterans of handmade-goods marketplace Etsy, wanted a mentor because they felt ignorant about cash-flow management, marketing strategy, and other crucial tasks. “We’re three engineers, so we’re great at building technology but had never done a sales pitch in our lives,” says Lifson, 28, who met Thompson, a 43-year-old serial entrepreneur, through the startup accelerator DreamIt Ventures in Philadelphia in the summer of 2009. Thompson, who isn’t paid, worked closely with the team during the three-month DreamIt program and still talks monthly with Lifson, who now works in New York.
Big companies use mentoring programs to train younger employees for leadership positions. Now dozens of U.S. startup incubators, economic development groups, and others who want to see new companies succeed are developing mentoring programs to pair less-experienced founders with veteran entrepreneurs. While entrepreneurs have long sought mentors informally, policymakers, universities, and investors are recognizing that the hands-on help can be as essential as financing in getting a new business off the ground.
The Startup America Partnership, launched in January at the White House with the goal of supporting startups, will this fall begin pairing entrepreneurs with mentors from dozens of partner organizations. The Small Business Administration is matching 100 cleantech ventures with mentors through a program begun in February and hopes to expand that to 1,000 companies in different industries. Moreover, a new wave of startup accelerators such as DreamIt and TechStars put young companies through intensive weeks of learning from experienced entrepreneurs while they develop their own products.
ADVICE ON PITFALLS
“Through all the processes of starting and growing a business, there are many things that entrepreneurs and founders run into they haven’t experienced before,” says Scott Case, chief executive of the Startup America Partnership. Beyond acting as a sounding board, mentors also provide industry expertise that inexperienced entrepreneurs may not have, in addition to advice on how to avoid pitfalls they’ve already survived, Case says.
Existing mentoring programs are seeing greater interest. Score, a 47-year-old volunteer group the provides mentoring and training for entrepreneurs, counseled more than 400,000 people in 2010, according to data from the SBA, which helps fund the group. That’s nearly one-third more than the organization reached in 2006.
As interest in mentoring grows, some successful programs are spawning lookalikes. The decade-old Venture Mentoring Service at Massachusetts Institute of Technology has worked with about 1,000 ventures started by students, faculty, staff, and alumni, says its director, Sherwin Greenblatt. About 140 of those have become operating companies that have collectively raised $850 million from investors.
WILLING TO GIVE BACK
In February, North Carolina’s Council for Entrepreneurial Development started a similar service to aid promising new companies across the state. The North Carolina program has some 40 volunteer mentors who choose businesses based on their skills and passions, then agree to meet with them as often as needed. “After that, it’s completely the willingness to give back, people who don’t have an ulterior motive or another agenda,” says Kathryn James, the group’s director of entrepreneurship. “They always leave meetings with focused actions that they need to take next and oftentimes connections and introductions.”
That kind of assistance can be particularly important for young entrepreneurs, says Scott Gerber, the 28-year-old founder of the invite-only nonprofit membership group Young Entrepreneur Council in New York, because many lack the training and experience to prepare them for being in business. YEC has more than 250 members with an average age of 25 who are invited to join based on their success and prominence, Gerber says. The council connects its members with mentors through live webchats, panels, and online discussion forums. Aspiring entrepreneurs “are starting pretty much fresh with no background,” Gerber says. Even for those who have had some entrepreneurship education, he says, “you can only get so much out of a book or out of a course.”
For Lifson, the mentoring relationship evolved: Thompson invested $50,000 in Postling in November 2009, the first of several outside backers who have bet about $1 million on the startup. She started using the service for 700 clients of her apartment rental service 4 Walls in Narberth, Pa., immediately after Postling launched in August 2009. The four-employee startup now has about 22,000 businesses that pay $1 per social media account that the service manages per month, according to Lifson. He says Thompson’s perspective was as important as her business. “She gets to see a side of the market that is a little different from what we see,” he says. “She was good at all the things that we were bad at.”