By Wang Yanbo
Entrepreneurs and the start-up ventures they launch are rightly seen as key drivers of technological change, economic growth and job creation.
Consequently, efforts to spur entrepreneurship and widen the pool of entrepreneurs have become an increasingly prominent feature of government policies, university initiatives and privately-backed accelerator programs.
Yet the results of these have been mixed at best, fuelling a debate over whether entrepreneurship is an innate talent or something that can even be taught in the first place.
In a study with a colleague at Stanford University in the US, we set out to examine and measure the impact of one increasingly popular method of driving the growth of entrepreneurship – namely mentorship from existing entrepreneurs.
Potential entrepreneurs face a number of hurdles in making the leap towards starting up a business. These include a lack of relevant skills, a general lack of information about entrepreneurial careers, and a lack of ties to resource providers.
Having conventional core business skills are important in launching a new venture. But entrepreneurship differs from other careers in that there is no straightforward way to develop in advance the other critical “soft” skills an entrepreneur needs – for example, having a self-starting drive, a tolerance of risk and an ability to manage the constantly evolving challenges that come with starting a business.
Faced with such daunting demands, it’s little wonder that aspiring entrepreneurs are often unsure which skills to prioritise.
Several studies have found that having entrepreneurial parents has the most direct impact on whether their children become entrepreneurs themselves. This is not particularly surprising: parents are a child’s closest role models, giving practical experience and advice on handling challenges as well as financial support.
Yet if we want to expand the pool of entrepreneurs, and do so quickly, relying on this limited group alone is not enough. We need also to cultivate potential young business founders from children whose parents were not entrepreneurs and were not raised in an entrepreneurial environment.
An experienced entrepreneur-mentor can offer knowledge and deep insight into the profession, such as how to evaluate business opportunities, pitch ideas to key resource holders, form early-stage teams, and navigate sources of external investment.
Certainly historical evidence shows that many successful entrepreneurs have themselves had entrepreneur-mentors. For example, the late cofounder of Apple, Steve Jobs, had this to say about his ties to Robert Noyce, cofounder of Fairchild Semiconductor, and the man dubbed ‘the Mayor of Silicon Valley’:
“Bob Noyce took me under his wing. I was young, in my twenties. He was in his early fifties. He tried to give me the lay of the land, give me a perspective that I could only partially understand. You can’t really understand what is going on now unless you understand what came before.”
The question for us though was how to ensure such entrepreneurial mentoring delivers optimal outcomes?
For our study we tracked more than 200 students over four years who enrolled in a class on innovation and entrepreneurship led by my co-author at Stanford University. Within these classes, teams of students – some of whom came from entrepreneurial families – were then randomly assigned a mentor.
Around two thirds of the students had mentors with successful entrepreneurial backgrounds, whilst the others had mentors with strong and relevant industry experience but were not entrepreneurs themselves.
Monitoring the students’ career paths after graduation about a third went on to either start a new company or join one. Breaking this down further we found that 37 per cent of the students who had entrepreneur-mentors either started or joined new companies, compared to 28 per cent of those whose mentors were not entrepreneurs.
However, for students who came from entrepreneurial families we found that, as expected, the parental factor overwhelmed any effect of the mentor’s background. Among this group, 46 per cent either founded or joined a start-up venture, whether their mentor was an entrepreneur or not. We put this down to these students having been raised in an environment which gave them a strong sense of what’s possible in starting a business and what it requires.
Our results showed the mentor’s background had the biggest effect on students who did not come from entrepreneurial families. Among this group, students who had no initial interest in becoming an entrepreneur, having an entrepreneur for a mentor increased their probability of starting or joining a new company from six per cent to 16 per cent.
This suggests that having an entrepreneur-mentor can help individuals overcome concerns that are holding them back from considering a career in entrepreneurship – for example, worries about their capability for entrepreneurship or the potential implications of failure.
But is there a risk that entrepreneur-mentors might be too fervent advocates of entrepreneurship and sugarcoat the reality of life as an entrepreneur? Might they even encourage too many unsuited individuals to become entrepreneurs?
We found no evidence to support this. From our results, students who had been mentored by entrepreneurs went on to launch or join companies that survived for on average 49.8 months. For students who had been mentored by non-entrepreneurs however, the average was 32.4 months.
Our results also suggest that having an entrepreneur-mentor made students more cautious about the companies they joined, indicating that the mentors may have helped the students be more rigorous in their evaluation of opportunities. In this case students from the entrepreneur-mentor cohort joined companies with a track-record of 16.7 months, compared to 7.7 months for companies joined by students who had non-entrepreneur-mentors.
Overall the message from the study is that whilst the children of entrepreneur parents are most likely to become entrepreneurs themselves, for those without this background having an entrepreneur can be a critical factor in realising their capabilities.
It also shows that whilst not everyone possesses the innate abilities or drive for entrepreneurship, with the right mentorship it is possible to learn the skills required to become an entrepreneur.
Wang Yanbo is an Assistant Professor in the Department of Strategy & Policy at the National University of Singapore (NUS) Business School. The opinions expressed are those of the writer and do not represent the views and opinions of NUS.