What Should You Look For In A Mentor?
“I want you to meet with Dave,” Mike, the managing partner of the VC fund I was interviewing at to be an Entrepreneur in Residence (EIR) said. “He does most of our semiconductor investments, so it’s important for the two of you to meet.”
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I was finishing up a long day of meeting with the other partners of Mike’s fund, but Dave was out of town. Mike, who I had known for a few years, wanted me to start an analog semiconductor company that they would invest in.
However, Mike needed his partners support before going forward, and Dave’s support was critical. If Dave didn’t like me, then I probably wouldn’t be an EIR, and my company wouldn’t get off the ground.
Dave and I arranged to meet at Coupa Cafe in Palo Alto on a rainy Friday night. Fortunately for me, Dave and I hit it off. Little did I know that Dave would become my mentor, advisor, and one of my closest friends.
However you find your mentors, you want a mentor that’s always going to put your interests first.
My working relationship with Dave began less as mentor and mentee, then as someone trying to figure out whether I could build a company that was worthy of investing in. That’s not to say Dave didn’t try and help me because he absolutely helped me with introductions to potential investors and with my pitch.
However, the trust that comes over time in any relationship wasn’t there yet. All that changed several months into our working relationship when Dave met me for coffee again at Coupa Cafe.
“Brett, I’m going to be leaving the fund,” Dave said to me. “And, with me leaving, I don’t think they (the fund) are going to invest in your company.
“You should start looking for other investors. And, I want to help you any way I can.”
Dave’s announcement didn’t come as a complete surprise. The fund seemed to be slow playing their support in my company, so I knew something was up.
‘Thanks for letting me know,” I said to Dave. “At least I can get moving now.”
Over the next two years as we struggled to close our funding because of the headwinds caused by The Great Recession, Dave was there every step of the way to help me. Be it with interviewing potential co-founders, introductions to more investors, or brutally honest advice, Dave kept helping me.
You want someone that’s been where you’re going.
“You should take the deal,” Dave said to me when I called him. I had thirty minutes to get back to “Raul”, our potential new investor. Raul had presented us with a, less than spectacular, term sheet for $12 million.
The terms sucked. And Raul wouldn’t negotiate. But Raul knew he had us. “You’ve been trying to raise money for a while now,” he said to me. “I’ll give you thirty minutes to get back to me, or this term sheet explodes like a pumpkin.”
Then the line went dead.
I immediately called Dave who was waiting for my call. I told him what happened, and he said, “There aren’t too many investors left on your list. They (“Donald Ventures”, the fund Raul was associated with) are offering you $12 million. I know the terms aren’t great, but you can go a long way with that amount of money.
“You should take the deal.”
Dave was right. He’d been a CEO, and he’d been a VC, so he knew what I was going through. He also knew that our odds of getting funded were pretty low if we didn’t take this deal.
I called Raul back and told him I accepted their terms. It was the right decision.
It’s difficult for your investors to be your mentors.
I kept working with Dave after we closed our funding. One of the things I really liked about working with Dave is I knew he was always focused on what was best for us.
Unlike an investor, he didn’t have any other interest except helping us. An investor will focus on what’s in their best interests.
Most of the time, your interests are hopefully aligned with your investors. However, that’s not always the case. That’s why you’re better off with an advisor that’s not an investor in your company.
And, yes you should compensate your mentors.
“Thank you,” Dave said to me after we closed our funding. “You’re being really generous (giving him founder shares).”
“You’re kind of like the fifth Beatle,” I laughed. “You’ve been there with me the whole ride, I thought this was the right thing to do.”
The percentage I gave Dave wasn’t insignificant. We also paid Dave a monthly stipend to keep working with us.
The cash was a number that didn’t break our bank, but that Dave felt good about too. Dave continued working with me, helping me through all the turmoil, and all the ups and downs that come with running a company.
I would have never been able to survive without his help.