Tech Startups Seek Mentorship

Seven in 10 (70.8 percent) of start-up owners in the tech industry believe that practical advice and mentorship would be the most valuable resources to help take their companies to the next level.

This is one of the results from the inaugural Capital One Growth Ventures Startup Barometer survey, the Startup Barometer is a semi-annual survey of technology startup business owners that highlights key questions and challenges facing many entrepreneurs today. Capital One Growth Ventures is a group of Capital One, McLean, Va.

The survey results suggest ways that banks can partner with entrepreneurs by providing them the information and services that they need.

The survey, conducted in September 2015, showed that entrepreneurs are most interested mentorship, incubation and networking opportunities (20.5 percent), along with marketing advice and counsel (20.5 percent).

The Startup Barometer examines how startup companies are growing and what they need most from their strategic partners and investors.

“Our findings show that, in addition to financing, tech startups need practical advice to help them grow and evolve their concepts,” says Jaidev Shergill, managing partner at Capital One Growth Ventures. “While tech startups are initially driven by the product innovation itself—the new platform, technology, or app they’ve dedicated their business to—it doesn’t take long for them to realize that ‘making it’ for the long term requires more than just a great idea. That’s where finding the right strategic investor comes in.”

Most tech startups planning for full-time hires

Among the tech startup owners surveyed, nearly half (44.4 percent) report that they are in the Series B stage of funding, meaning that they are in the midst of scaling the business, building awareness and gaining traction with users. When asked about hiring plans, the vast majority (85.4 percent) reported that they plan to hire new talent in the next six months. Of those startups planning to hire, 77.5 percent will hire full-time employees, 48.8 percent will hire part-time employees, and roughly one third will hire contractors and interns.

Working with strategic investors

As tech startup owners grow their businesses, they must determine the type of relationship they will establish with investors—whether it is an institutional investor who provides only financial support or a strategic or corporate investor that adds value to a company through a combination of funding and additional resources such as market knowledge, experience, and industry contacts. The survey found that three in ten (29.1 percent) tech startups surveyed currently work with corporate investors, while 37.1 percent partner with strategic investors who are not from large corporations.

When asked about their expectations of investors, most tech startup owners reported that they expect commercial relationships (69.5 percent) and connections (61.6 percent) to a broader network of industry and subject-matter experts. Beyond relationships, tech startups also expect industry expertise (47.7 percent) and guidance and mentorship (42.4 percent). In return for these resources, the survey found that the most common benefits provided to strategic investors include performance-based financial benefits (70 percent), board representation (49 percent) and decision-making power, particularly in regards to acquisitions (47 percent).

What tech startups need most

The survey found that one in five (20.6 percent) tech startups surveyed does not yet have a fully defined business plan or economic model for their company. When it comes to time management, nearly half of tech startup owners (49 percent) report that—in addition to developing their company’s product or service—the majority of their time is dedicated to day-to-day business operations such as human relations and accounting.