Start-up accelerators, incubators, and mentors are epic fails

Published on the 04/09/2017 | Written by Ajeet Khurana

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Experienced Indian angel investor, advisor and mentor Ajeet Khurana makes harsh criticisms and valuable observations which resonate in Australasian markets…

The idea of accelerators, incubators, and mentors is great in principle, but it largely doesn’t seem to be working.

Without begging the issue of how one defines ‘success,’ the success rate of start-ups coming out of incubators and accelerators is lower than the already abysmal rate of start-up success in general.

And this is distressing.

Given that most of what I do revolves around working with founders, it is embarrassing, nay, humiliating, to acknowledge that the seemingly great idea of business accelerators/incubators is not yielding fruit.

Here are some scary facts (in India):

  • Almost none of the top 20 to 30 startups were ever a part of an accelerator/incubator.
  • The best start-ups from top 2-4 academic institutions were never part of the business incubators in those same institutions.
  • Even incubators/accelerators that have been around for years, and have ‘processed’ 50+ start-ups, usually don’t have even one that has achieved impressive success.

But why?

Top reasons incubators, accelerators, and mentors fail
There are multiple reasons behind the poor track record of well-intentioned interventions. The economics of accelerators and incubators are such that top-quality mentors/professional staff cannot be afforded. This leads to paper-pushers and clerical folk, however well meaning, running the programs.

And this frustrates founders.

Incubators/accelerators have turned into echo chambers that repeat the same inane slogans that initially excite founders. These slogans eventually just bounce off them.

Then there is the provision of ‘support’. Cloud credits, limited-time use of free shared-offices, and other low-value but tangible benefits are easier to communicate than the seemingly intangible mentorship.

And perhaps more sinister, often, the very intent of setting up an accelerator/incubator is suspect.

Examples include academic incubators which are little more than shared office spaces; accelerators run by the lowest rung employees in a Venture Capital firm (which is seeking to expand its deal pipeline); initiatives by tech companies which are merely distributing free credits to expand the user-base of their products.

If mentors, accelerators, and incubators are unable to contribute to a founder’s success, they are failures.

It’s really about the mentorship
Mentoring is the core of the value that incubators and accelerators should provide. This is the secret sauce, more than office space, cloud credits and even hard cash.

And mentoring is the weakest link.

Our ecosystem has several altruistic mentors. They genuinely want to help founders. But in the absence of a structured arrangement or deliverable, their relationship with their mentees tends to either remain superficial or short-lived.

In many cases, individuals turn to mentoring for all the wrong reasons. I have seen mentors try to prospect their mentees, and convert them to paying customers. Others merely want to include the word ‘mentor’ in their resume. Not much can be expected from these folks.

When founders face obstacles, they seek inputs from mentors. But given the broad spectrum of these obstacles, mentors rarely possess the expertise necessary to spit-out solutions.

The most helpful responses would actually be: ‘I don’t know’, or ‘let me find out more about this before I respond’, or ‘I know someone who could help you with this’, or ‘I need more information from you before I can think about a response’, or ‘I cannot help you decide, consider these factors’.

Instead, I find mentors feel compelled (and confident!) in responding to every query posed. This superhero-mentor that can solve everything is usually the least valuable – but, unfortunately, it takes time before their hollowness becomes obvious.

The sincerity trap
I am saddened when capable and sincere mentors engage with capable and sincere founders, yet no value is created. A founder meets the mentor, who gives outstanding counsel. And that is where it ends.

The founder gets busy with daily operations. And the mentor doesn’t think it is her or his place to follow up with the founder.

It is important to complete the feedback loop. Accelerators and incubators should keep the mentoring relationship on track. But in most cases, the mentors are invitees providing a favour to the accelerator/incubator and hence cannot be held accountable.

After disillusionment from jibber-jabber mentorspeak, many founders develop the attitude that the only kind of mentor that has any value is the one that can help them fundraise.

And the glorious edifice of mentor-utopia comes crumbling down.

Is all lost, or is there still hope?

Having been an entrepreneur twice, and angel investor/mentor dozens of times, I suffer from the belief that problems can be solved; even if the odds are stacked against.

The rampant failure of accelerators/incubators/mentors can be solved. But that requires relooking at the expectations from these arrangements.

What I propose is just one of the many approaches; you might have a different view. My recommendations stem from limited experience as a mentor to several startups in a formal/informal capacity. Also, I have developed my view about what works and what doesn’t from engaging with many incubators/accelerators.

Here’s what works (and what doesn’t)
Avoid a classroom-like approach where entrepreneurs are ‘taught’ how to succeed. These have limited positive value, and can even have negative outcomes.

The only situations where the classroom/lecture approach can work are when:

  • You are addressing people exploring the thought of entrepreneurship and who want an idea of what it is like, e.g. school students
  • You are conducting a workshop on a specific, fact-based, topic, e.g. a new tax-provision that has an implication for entrepreneurs.

Create a community of founders who they can help each other. And I mean community, not just a dysfunctional WhatsApp group, Facebook page, bulletin board.

Creating a community is difficult and time-consuming. But if you are successful, it pays back many-fold. Some institutions discourage many-to-many interaction, and prefer the more controlled one-to-many approach (where they are the ‘one’.) They worry that their constituents (the founders) will ‘unionise’ and complaints will get magnified. This approach is self-defeating.

Provide a platform for founders to choose a few mentors from a pool of several. Likewise, support the mentoring engagement only where the mentor too has chosen to work with the specific start-up. The idea of, ‘here is our mentor panel and all of them will help all our startups’, is likely to end up in slogans, clichés, and superficial engagement.

Engage multiple mentors with each start-up. This can be a double-edged sword. On the one hand, it runs the risk of creating confusion in who does what. On the other, it can present a richer opportunity for the founder. Also, there is the real risk of founders not being mature enough to deal with situations where different mentors have contradictory points. Despite these potential pitfalls, I have observed some outstanding successes of a multiple-mentor approach. A common point in all such success stories was that the mentors were at ease with each other, and would often engage with each other in discussion about the start-up.

Ensure there is a centre of authority. This can be helpful with two provisos:

  • The centre of authority commands the respect of all constituents: founders, mentors, partners
  • The centre of authority is more of a facilitator of processes than an operating participant. As an example, the centre of authority would inquire and follow-up with mentors about their startups, rather than become a mentor herself/himself.

Align economic interest among all participants. This is desirable to maintain long-term sustainability of mentoring arrangements. This is better than hoping that one is lucky in stumbling across altruistic mentors who will sustain their enthusiasm in long-term mentoring.

Of course, economic alignment is not the panacea here, and far more curation is required in selecting mentors. (Note: The method of aligning economic interest is a deep, and controversial, topic).

Avoid confusing a mentoring relationship with a consulting arrangement. A consultant tends to have specific deliverables. Where mentors have created substantial value for their mentees, I find in most cases the specific area where the mentor turned out to be helpful wasn’t one that either the mentor or the mentee could have forecasted.

Think twice before dishing out advice or proclaiming verdicts. Nothing is more irritating than the know-it-all mentor who can provide answers without even spending enough time to understand the question.

Understand that routinely, the combined resources of a mentor/accelerator/incubator are not sufficient to help the founders. This is where making introductions and providing connections becomes a crucial part of the mentoring process. An insecure person who pretends to have a fool-proof solution to all problems is a fake, and is highly unsuitable as a mentor.

Attempt to answer founders’ questions. But recognise that a more important role is to help founders think of questions that need answering. Some founders are operationally driven, and fail to have an appreciation for ‘strategy’. Likewise, there are the big-picture founders who fall short in operationalising their strategies. Both founder types have a greater probability of success if their mentors can help them think through their blindsides.

Best intentions (and disclaimers)
No amount of design and strategy is going to create great accelerators/incubators/mentors if the intent is insincere.

As for disclaimers. I am not saying that all accelerators/incubators/mentors are failures. I am sure there are success stories. In fact, I hope that some of my mentees believe that I have made a valuable contribution. So, chill!

Painting accelerators and incubators and mentors with the same broad brush can lead to some ambiguity. And finally, I have engaged with over 50 incubators/accelerators, so any attempt to map my comments on to any one specific organisation is neither appropriate nor valuable.

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