It’s pretty easy to see how a developmental mentoring relationship would benefit a young entrepreneur embarking on his or her first enterprise. Starting a company can be a lonely and daunting affair. The shared wisdom and support of someone who has been there before can help guide a young entrepreneur through uncharted waters, and build the self-confidence and resilience needed to meet the challenges ahead.
It is unsurprising therefore that many incubator and accelerator programs offer “mentoring” as part of their package. As mentoring professionals we applaud the intention, but we are troubled by the approach often employed.
True developmental mentoring involves a mentor who does not have a conflict of interest. And this is where some incubator mentoring programs start to unravel – when their “mentoring” programs match young entrepreneurs with either a potential or current investor.
We have no doubt that wearing their “mentor hats”; many of these individuals possess the experience, wisdom and listening skills needed to provide valuable guidance and support. The problem comes when they slip on their “investor hat”, and their attention inexorably shifts to financial opportunity, downsides and business risks.
One cannot blame a potential investor for focusing on optimizing their return. But how does that play out when a trusting young entrepreneur confides their fears and management weaknesses? Given this knowledge, an “investor” may feel it prudent to replace the entrepreneur with a professional manager. Yet, acting on this impulse could be interpreted as a complete betrayal by the “mentor”. Insidious positions like this one are part and parcel of the conflict of interest inherent in the dual role of investor and mentor.
On the mentee side of the relationship, one questions how honest a mentee is going to be with a current or potential investor, despite the added title of “mentor”. It will be difficult to come out from behind the façade all entrepreneurs must employ to sell themselves and their ideas. The person across the table is, after all, a potential financial benefactor and a vehicle to get their business off the ground. Does the mentee really risk letting them see the chinks in your armor?
Without letting a “mentor” behind the façade, the potential for personal and professional growth is stunted. Yet if a mentee does let down their guard, they are extremely vulnerable to a “mentor” with a clear conflict of interest.
Potential and current investors can, and do, provide excellent advice and guidance to young entrepreneurs. But we question their ability to act as unbiased mentors, focused solely on the development of their mentee.
The unacceptably high rate of depression and suicide among young entrepreneurs is evidence that developmental mentoring is badly needed. Entrepreneurialism is a risky and scary business, more likely to shine a light on all your personal flaws and weaknesses than to make you a billionaire. The young men and women with the guts and determination to take this risk deserve a mentor with an undivided focus on helping them to succeed.
We encourage all providers of entrepreneurial mentoring to examine their programs carefully and seek to match young, often vulnerable, entrepreneurs with mentors outside their investor pool.
A growing stream of young entrepreneurs is the foundation for a wave of new incubators and accelerators. If these businesses offer mentoring to entice entrepreneurs to their service, they have a duty of care to ensure that the mentoring relationships they create are not marred by conflict of interest and are genuinely focused on developing young entrepreneurs.