Mentorship or Money?
There are a lot of things you need to think about as a first-time entrepreneur at the head of new startup, but most entrepreneurs have been conditioned to reflexively gravitate to speaking to investors first. While it’s very important to start thinking about money and where it’s coming from as part of the ideation stage, i.e. your business model, the notion that you should pick money first isn’t always the right answer.
There are many cliches floating out there surrounding startups and money, such as “Entrepreneurs launch new ventures because they either want control or money” and “As an entrepreneur, you should always follow the money.” There’s more than just money and control though and chasing money will not make your startup successful. As a matter of fact, an article on Entrepreneurship.org, a Kauffman Foundation site, suggested that the what entrepreneurs really want is a mentor. Besides, raising money right off the bat is a huge distraction and detracts from the original purpose of launching your startup.
Money alone will not make your startup great, and the lack of it will not be the reason for its failure. Despite the statement that most startups fail for lack of money, not ideas (a statement which I have to admit being guilty of using myself once or twice), startups fail because they can’t pull together a good enough team to execute an idea well enough to gain the traction that warrants someone giving them money in the first place.
I believe that having access to and engaging with mentors and advisors are more important in determining whether a startup will be able to organize itself in such a way to lead to a successful outcome, as well as attract the right money at the right time. After all, without a little good advice, you may not know how to spend that big check you’re going to receive from a VC — you may spend it too slow or too fast, or on all the wrong things. You may also consider that a startup with a good group of advisors may signal future investors that the team is squared away and has a good idea that it is executed well against.
So, do yourself a favor and stop believing all the hype. Sure, think about where the money will come from and have a plan about how you execute your idea until you get more money, but don’t blindly chase the money. In my humble opinion, if your startup is presented with a choice between mentorship or money, you should pick mentorship until you have enough of it to be able to wisely use the money. Oh, and if you are looking for examples of this in action, look no further than TechStars and Y Combinator. They tout their mentor networks as key elements of their programs (as do most accelerators).
What are your experiences around mentorship and money? Which would you rather have first?