The Mentor Capital Network team has been conducting ongoing research through our program, based on data from more than 8,000 review forms and hundreds of mentor-entrepreneur engagements.
We recently presenting some of our findings to the Social Venture Circle. That presentation (30 minutes) and the Q&A (30 minutes) is available here:
Some top-level learning from our research includes:
Of the eight basic components of a business plan (Market/Customer Analysis, Team, Operations, Mission, Financials, Presentation, Product/Service, and Risk) the strongest correlation to eventual success in terms of revenue and longevity is the ability to do well in the Marketing and Customer Analysis section.
However, if success is measured in terms of funds raised and employees hired, the marketing category falls to the middle of the pack, and the strength of the product or service itself becomes most important.
Risk and Financials are the two categories that were the most accurate assessment of a company’s eventual success (or failure) — that is, the score assigned by our reviewers in these categories was most closely correlated to the future success or failure of the firm they reviewed.
We looked at the leadership teams for 776 companies that we worked with between 2008 and 2018. We tracked them based on variances in Age, Race, Gender, and Country of Origin.
The most significant value was having a mixed-gender team. Mixed-Gender teams outperformed all-male and all-female teams by at an average of 50% in all success categories (Longevity, Revenue, Employees, Funds Raised, etc.) However, one of companies, Tala, led by an all-female team, is an outlier, having raised more than twice the amount of money of the next company on the list, so we also produced a chart with their information removed.
In an effort to determine if reviewers over- or under-weighted entrepreneurs who the reviewers felt were like them in terms of values, skills, mission, etc. we took into account more than 2,000 survey responses and found that, for the most part, they didn’t.
We looked to see if our reviewers showed a bias for or against entrepreneurs when groups were compared by age, race, gender, and country of origin. In terms of mentor engagement (our most precious “resource” that we distribute) there was little to no significant variance. In terms of assigned scores, there was some moderate bias (even accounting for overall optimism / pessimism of the reviewer and the eventual success or failure of the company) and we are currently investigating those particular groupings to see if there is a discernible reason for that bias.