Being A Mentor For Entrepreneurs: A Practical Guide

Angel investing guide to mentoring entrepreneurs
Photo by Laughlin Elkind

Adapted from an article originally published by the author in Inc. Magazine.

Angels talk a lot about mentoring, but how many know what it really means? If you can’t describe what a great mentor does, you’ve probably never been one.  A great mentor relationship is actually a pretty rare and special thing.  It doesn’t come about all that often, and it’s not something that can be forced.  But it is worth trying to find an opportunity to mentor if you can, because great mentors are so powerfully helpful to entrepreneurs and derive immense satisfaction in the process.  

No two mentor-mentee relationships are going to be alike. The best ones almost feel like an accident.  Regardless of how the relationship starts, what all great mentors have in common is they not only help an entrepreneur fill in her blind spots, they help point those blindspots out in the first place.  Great mentors keep an entrepreneur honest, and keep their feet on the ground,  but can also take them to heights unimaginable.  Given this, it is worth trying to decode how these relationships work, and understand what entrepreneurs expect so that you can be alert to mentorship opportunities around you and ready to make the most of the opportunities as they occur.  

What do entrepreneurs look for? 

The universe of mentors can be divided into three categories.  

  • The “industry expert” mentor. These are the people who deeply understand the industry, market, customers or technology and can give strategic advice and make crucial introductions.  Most people initially think of this mentor type.
  • The “company-builder” mentor.  These are the battle-scarred pros who have been to the start-up rodeo before and can help with all the generic issues associated with building and scaling a company.  
  • The “personal growth” mentor.  More like life coaches,  these mentors take a genuine interest in the entrepreneur as a person and want to help him/her with their personal growth and professional development.  They can help an entrepreneur find their voice as a leader and teach them to deal brilliantly with the sticky situations which inevitably arise.

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Which type are entrepreneurs looking to find? 

Well, in a perfect world, they wouldn’t have to choose. Almost anyone can benefit from some help across all three categories. They all need to grow, their company needs to develop, and they need customers, right? These are all important, and so, if they could use the help, they should be trying to find each kind of mentor. Leading a startup is a lonely and overwhelming job, with big ups and big downs. Having multiple coaches to help them keep their perspective can be invaluable.  Even if it is a long shot, they should look for as many great mentors as they can find.

How do they find you?  

The key is just being on the look-out for this kind of relationship and being open to offering the help and giving the coaching.  As a start, entrepreneurs will generally ask people if they know someone who would be helpful for a given set of questions.  Getting out to the entrepreneurship-focused events and organizations and meeting and talking to people is essential.  Sometimes they will approach you if they have seen you speak or write.  But mostly it is about asking the questions and being open to getting the help where you can find it.  If you are serious about being a great mentor and you are active in the community, entrepreneurs will find you.

How do you know when it’s the right fit?

A mentor is the business equivalent of a wingman. An entrepreneur can feel it when someone has their back.  They can feel the empathy, even in the context of tough questions or really direct feedback.  Good mentors will make time for entrepreneurs and be responsive to inquiries.  They are engaged in the problem. It won’t be the same in each case, and some relationships will be longer than others, but you can feel it in your bones when you’ve found a good match.

How do you set up the relationship? 

It’s actually better to keep it a little informal and fluid at the start.  Great relationships will develop organically, and this early informal period gives you a chance to evaluate the chemistry and gauge the level of helpfulness and engagement.  When an entrepreneur starts to rely on a mentor for more regular consultations or more involvement and help, it is probably time to formalize things a bit.

In a genuine mentorship arrangement a written agreement is sometimes used, and that’s fine (particularly where payment is involved), but a written agreement is often over-kill – after all, this is supposed to be a relationship based on trust and looking out for each other.  But formalizing the expectations both parties should have from the engagement is very important.  Naturally, compensation is one of the key questions.  Many mentors won’t want or expect compensation.  They may simply be delighted to be able to help and share their expertise,  may be fascinated with the problem set,  may simply admire an entrepreneur as a go-getter, or may enjoy the opportunity to give back and pitch in.  

In other situations you will expect to be paid.  If you are really proving value, that is a reasonable request.  But mentors should always be paid exclusively with stock (typically options).  In terms of the amount, do not encourage them to over do it – many inexperienced entrepreneurs ruin their cap table giving away far, far too much stock to greedy advisors, so-called mentors, and other hangers-on.  A small-to medium sized fraction of a single percent of the company should be all you expect. When in doubt, or when you think you are owed greater compensation, protect the company by asking for shorter vesting rather than more stock. The reality is that the company may out-grow your skills, or you may realize they are too early or too advanced for you, and you won’t want to be hanging around indefinitely.  Another valuable form of compensation you may be offered is a promise that you will have the opportunity to invest in the company’s seed round of financing (and/or a later round).

Check them out first.

Before formalizing a relationship or taking stock, it is essential to do a little diligence on your entrepreneur.  Check a few blind references and make sure this is a smart, capable, hard-working, high-integrity person you are getting involved with.  Make sure they really understand what it means to chose the entrepreneurial path and they are committed to seeing the journey through. 

If, after a bit of investigating and some time together, you feel the relationship is going to work and be valuable, you should have a conversation about how it will work.  This is the time to talk about compensation, but even if they don’t pay you, this “calibration” conversation will set up important guidelines.  Discuss the time commitment they expect,  how you both prefer to communicate (email, telephone, face to face, day time, evening, weekends, etc.), and what level of responsiveness they expect when they ask questions.  Ask about conflicts of interest and make sure you disclose any involvement you might have with potentially competing companies.  And even if they don’t remind you, you should know that company details are confidential.  You should also clarify whether you are comfortable having your name used in connection with the company, and how you expect the entrepreneur to interact with introductions you make.  

Go make it happen.

Although some of these mentorship topics might feel a bit formal and awkward,  it is a very important and potentially impactful relationship, and an experienced mentor will expect professionalism on the part of a founder.  As a mentor you have the potential to provide incalculable value, so power through the formalities and get the relationship on a good foundation.  If an entrepreneur takes the time to seek out the right mentor and have the important conversations upfront, down the road they will be unable to deny the importance of the role great mentors played when they look back.