Considering a startup? Do you have an idea, or are you on your way? How do you pick up the pace?
New ventures rarely succeed simply with one single player. If you’re considering a startup, or you’re in the midst of creating a new venture – you must enlist advocates to help you on your path.
And here’s the thing – we’re not just talking about money. In fact, money often isn’t the answer.
Research conducted by myself, fellow Kelley School of Business professor Todd Saxton, and Curtis Wesley II of the University of Houston’s Bauer College of Business takes a look at the importance of and motivations for venture advocates who help startups move forward in an article entitled “Venture Advocate Behaviors and the Emerging Enterprise,” published in the Strategic Entrepreneurship Journalb (2016).
We found that while money is important, the make or break thing often is the HELP you’re able to solicit from others. New ventures face uncertainty on a number of fronts, and venture advocates can help to answer those questions:
By testing out products – they might be beta customers
Referring customers, employees, advisors and investors – they connect you to others
By simply providing advice – they can be a sounding board even if you don’t yet have a formal advisory board
This forms what we call an entrepreneurial ecosystem . The Startup Ladies is certainly a great example of a connector in the Indianapolis, Terre Haute, and Bloomington entrepreneurial ecosystem for women-founded startups.
Venture advocates help others without specific pay or quid pro quo, because there is a social exchange. The worth of their contribution is not calculable. The venture’s value is not calculable. Instead, they are paying forward for help they may need in the future, or paying back for help they’ve received.
There are six factors that enable venture advocate behaviors.
The first is the likely success of the venture – Even to just get people to help you, they have to believe you are going to make it. So, you need to be buttoned up in your “pitches” to potential advocates. The characteristics of the potential venture advocate also matter. They have to believe they can actually help you. They also have to be interested in social exchanges and believe in reciprocity (you give so you can get or because you already got); some people will only do things for pay. Finally, venture advocates need to identify with the local venture ecosystem and recognize that they derive benefits from contributing to the greater whole.
The bottom line is: Not everyone you meet – or need to meet -- is a investor. Look around and try to find those people who can help you be successful because of the non-monetary resources they can provide. – your venture advocates. Approach them professionally – They need to believe in your cause. Choose carefully who you ask by focusing on those that want to be part of the ecosystem and seem to be willing to help new ventures for the greater good. They should be connected to others who can help you unless they are simply going to be an advisor. And if someone does help your venture, consider how to pay them back for that help. It doesn’t have to be quid pro quo. Acknowledge the impact they’ve had, and make sure to tell them how they helped you. Then pass it on. When you are successful, help others who are on the same path. It’s what will help our central Indiana venture ecosystem survive - and thrive.