Lessons from Connecting Companies and Capital: Mentors and Advisors

While the IPO market seems to be showing some early signs of opening up, today’s entrepreneurs still face a tighter capital market, tougher M&A and IPO valuations, and investors are looking for not only revenue but leading market key performance indicators. Launched in 2010, Accounting Management Solutions, in partnership with IBM’s Waltham Innovation Center, hosted a series of events called “Connecting Companies with Capital.”  The goal of these events is to help entrepreneurs learn more about funding and successfully growing their companies. The most recent “Connecting Companies” event, held on May 11th, was the third in the series. This day-long event supported organizations in Healthcare/Life Sciences, Technology, and Energy, and attracted more than 200 attendees who were able to learn from the experts on various panels and participate in “Investor Speed Dating.”

One of the day’s most valuable panels was comprised of a handful of successful local entrepreneurs.  The panel participants – each had raised funds, built a company and participated in a sale – talked about their own experiences.  Moderator Susan Houston, Executive Director at MassEcon, asked what the most important qualities were for a mentor or advisor.

CEO and President Diane Hessan’s company Communispace was bought by Omnicom earlier this year. Hessan says she, “doesn’t believe in having one mentor who you talk to every single day and who just embraces you.”  She said, “that there are at least 40 people in the city of Boston who think they are singularly responsible for my personal success.” While Hessan finds it appealing to have people who are willing to help a little, she found it much harder, and actually much less helpful, to have one person helping a lot. Hessan feels entrepreneurs need different kinds of help at different stages.

Hessan also cautioned the audience not to “aim too high” for their board. She’d had “famous people” on her board and thought that while it was great to have them on the website, if she had to do it again she might choose people who were just a little more experienced than she was. “If you’re a couple of years out of college or graduate school, pick someone who is two years ahead of you. And get people who have the bandwidth to do it. If you reach too high, you’re going to be asking the people who get a hundred calls a day from people asking ‘will you be my mentor?’ You want people who are willing to really help you in a substantive way.”

Patrick Scannell, Jr., CFO and Treasurer for Netezza, which was purchased by IBM last year, agreed and said, “it’s important that you know you have a real person who is at the end of that lifeline and who has five minutes to talk to you.” Scannell pointed out that while it’s not often you’re going to share “deep dark problems” with your board members; you might want to have casual conversations with them outside the boardroom, “where you can say ‘I’ve just never done this before. Have you seen this issue before?’”

Jack Danahy is the original founder and CEO of two successful security software companies: Ounce Labs, sold to IBM in July of 2009, and Qiave Technologies, sold to Watchguard Technologies in 2000. He currently works for IBM. Danahy encourages entrepreneurs to “find people who aren’t much like you, if you can. If you’re a technologist, find someone who really understands marketing. I gravitate toward people who are focused in sales and marketing because that’s still an area where I have a lot to learn. The people I found to be great were people who were already successful.  They were people I knew, who were in businesses like mine. They were able to foresee some of the problems that were going to happen.”

Danahy also advised the audience to look for people who had had some trouble.  He felt that knowing how to get through the hard times was invaluable. “The bad times are where you learn to make those quick decisions that determine whether you’re successful or a failure.”

Thinking about seeking funding?  Talk to your AMS consultant about proper preparation.  Also, check out AMS President and Founder Jim Bourdon’s thoughts on advisory boards.

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