How some mentors take advantage of startups they are meant to be helping
Looking for more leads for your consulting business? Startups in accelerators are a great target as they’ve just raised funding and are looking for additional help. Accelerators have mentors who volunteer their time to advise the companies during the programme, if you use this to build an air of authority, you can easily convince these naïve founders that you’re an expert and that they really should be paying you for your advice. After the mentoring session is over, when they come to you with any more questions, let them know how much you charge per hour if they want any more of your valuable insights.
I hope you’re not expecting a How-To guide.
The above attitude is something I have been seeing more and more with so-called “mentors”; using their position as a mentor and the legitimisation of an accelerator as a way to exploit startups by charging fees for advice.
I think this is despicable behaviour and both startups and their accelerators should call out these fraudulent “mentors”.
Mentoring startups, especially through a structured programme, should be to give back to the ecosystem and support entrepreneurs; by sharing the mentor’s experience, connections and lessons learnt. I have great respect for those who take time out of their busy schedules to give back with nothing expected in return and the vast majority of mentors do so with pure, altruistic intentions to the great benefit of the companies they mentor.
Even service providers (lawyers, accountants etc.) who mentor at accelerators might have the thought of generating long-term business in the back of their minds, but tend to be very generous with their time and would never push a paid engagement for simple advice; drawing a clear line between what is work and what is mentoring.
But, there are a few bad apples that are exploiting their role as a mentor to line their own pockets and I feel this bad behaviour should be called out.
These “mentors” use accelerator mentoring as a way to sell their advisory services on generic topics like business and marketing strategy to the startups they are meant to be helping; turning a mentoring session immediately into a sales pitch for their snake oil. I have heard stories of founders approaching a “mentor” from their accelerator after the mentoring session and immediately being told that they need to pay them if they want any more of their time. These “mentors” then stay in touch with the companies they met, not to help them, but to pitch them on their services, refusing to help until they are paid. Sometimes founders end up falling for this scam and losing their funding to something they should have expected to receive from the accelerator for free.
These are crooks who are putting their own benefit ahead of the startup they are meant to be helping, hiding behind the legitimacy of being a mentor of the programme. All startups should avoid them and accelerators should openly disavow anyone who tries to exploit their startups in this way.
And don’t even get me started on fundraising advisors…
Just to be clear, I do think there is a legitimate path from a mentor to a formal advisory role with a startup. After a mentoring introduction, if there is a mutual interest between the mentor and the company, they might continue to build a closer relationship over time. First this is unremunerated but once it has been show that the value is significant for both parties, I do think it can make sense for the advisor to take a formal role, sign a written advisory agreement and be granted some stock options for their time and commitment (with a standard vesting schedule over the years that the advisor will add value). This is very different from a “mentor” aggressively demanding a cash payment on day-one for their time. A good guide on advisor compensation can be found here.
London startups: if this sounds familiar and you’ve had a “mentor” inappropriately try to sell you their services, please do reach out to me on firstname.lastname@example.org with details. All responses will be kept strictly confidential.