Investors as Mentors: Why and How to Find Them

Investors as Mentors: Why and How to Find Them

One of the best places to find mentors is in your business' investors. Investors are typically high networth individuals who've already experienced business success on their own. Their experience, knowledge and skills can help you avoid pitfalls and make the right decisions in every turn of your business.

==> The Money v.s. The Expertise

When Pierre Omidyar, founder of eBay approached Benchmark Capital in 1997, they were already quite profitable. The site was growing at an enormous rate and they had investors literally begging for them to take their money.

They continually refused the money, because they didn't want to sell off a part of their company. Eventually, they decided to take on Benchmark Capital's money for one reason and one reason only: The expertise of the partners.

Through Benchmark, eBay found Meg Whitman and managed to lure her away from a lucrative position in Hasbro. She played an integral part in the company's success.

Investors sometimes just bring money to the table. While money is important, it's often not the most important thing.

When you're choosing investors, try to choose investors who can also bring something else to the table: Expertise. Connections. Experience.

If it weren't for Benchmark Capital, eBay wouldn't be what it is today. It's not because of the money; it's because of the expertise.

==> Where to Find Mentor Investors

If you're raising capital for the first time, you're probably going to be looking for angel investors (rather than V.C. investors.) You may also be looking at startup incubators.

Angel investors can be great mentors; but can also be tough to land. You need to really have your pitch together. They're not just putting their time on the line, but their money as well.

Try to get involved with local angel organizations. Make pitches at angel gatherings. Visit local entrepreneurial events, such as talks by V.C.s or "Startup Weekends" to meet angel investors who scout such events for startups.

Startup incubators are another option. Famous ones include Y Combinator and Tech Stars. The incubator world tends to focus on the tech scene, whereas angel investors invest in all industries.

An incubator is where you and several other startups all launch at the same time. You're all mentored together by a group of experienced entrepreneurs. They usually put in a small amount of capital and receive a small share of equity.

Finally, don't underestimate the power of informal meetings. You can often meet investors who'll mentor you in places you'd least expect. For example, you could meet your future investors at a marketing convention or at your local Toastmasters club. Sometimes investors who aren't professional angels are actually easier to land because they aren't being pitched to all day.

Niche Mentors: Sometimes Better Than a "Business Mentor"

When most entrepreneurs look for mentors, they tend to look for generic "business mentors." People who can help guide them on their path to success. However, entrepreneurs often forget to look for niche mentors. Often times looking for niche mentors is better than trying to find a general business mentor.

==> What is a "Niche Mentor?"

A niche mentor is someone who knows just one specific area of your business model very, very well.

For example, let's say you're a rapidly expanding eCommerce website. You're getting to the point where you need to switch from dropshipping to running a warehouse. Unfortunately, neither you nor anyone on your staff has any experience running a fulfillment operation.

You don't know what the right equipment is. You don't know the processes. You wouldn't know a good employee from a bad one. You don't know where to start.

Instead of looking for a "business mentor," you should instead be looking for someone who understands just fulfillment very, very well.

This concept applies to just about every business. The expertise you need might be financial, it might be technical, it might be in manufacturing, it might be in going abroad. Whatever the case is, sometimes it makes more sense to look for mentors in a very specific arena rather than generic mentors.

==> Figure Out Where You Need Mentoring

Break your business down by all the different areas of expertise needed. To continue the eCommerce example, the breakdown might look something like this:

- Ability to generate traffic

- Ability to run the web software

- Ability to find wholesalers and distributors

- Ability to run fulfillment

- Ability to find investors

You might look for mentors in each of these individual areas. Some arenas, like finding investors, can be addresses by any mentor. Other areas, such as finding wholesalers from China for example, are better addressed by specialists.

==> Some of These Mentors Can Be Hired

When you're looking at a broad business mentor, you're usually looking at someone who has a very casual relationship to your company. You might only meet with them for coffee once every week or two.

That's because these kinds of mentors tend to be high networth individuals. You won't be able to bring them onto your team unless they're also investors.

On the other hand, many niche mentors won't be high networth individuals. For example, an expert on how to run a great fulfillment operation probably isn't a millionaire. You'll often be able to hire these people and bring them on your staff.

Your staff can be your mentors. As Michael Dell says, your core group of employees should always be smarter than you. You shouldn't be pulling your employees to the next level; instead they should be pulling you.