Jeffrey Carr from NYU Stern’s Berkley Center for Entrepreneurship talks about the need for mentors in the New York startup scene
Let’s be honest; the rush to grab funding in the New York startup community has brought out committed entrepreneurs as well as the ne’er-do-wells looking to make a quick buck. Not everyone is born with the savvy to create a killer idea, but Jeffrey Carr works to help those who—with the right mentors—can produce solid businesses. “One of the hurdles New York City has is, as good as the tech scene is, you’ve got to get those people together,” he says.
Carr is the executive director of the Berkley Center for Entrepreneurship at the Leonard N. Stern School of Business at New York University, which connects its students with experienced entrepreneurs and others from the business community eager to share their knowledge. Carr says such mentors can help new entrepreneurs who keep open minds about their real world prospects. “I’m not naïve enough to think people actually learn from other people’s mistakes,” he says.
Brian Cohen, vice chairman of investor group New York Angels, says the local startup community needs more stringent scrutiny to separate the business ideas with potential from the driftwood. “There is a lot of room for improvement on the rigor that startups require,” he says.
At the NY Tech Meetup on Sept. 6, Cohen presented Carr and his team from the Berkley Center with the first ever Outstanding Professionals for their Entrepreneurial Leadership (OPEL) Award for their efforts counseling entrepreneurs and connecting them with experiences mentors. The award, created by New York Angels, will be presented annually to leaders who help nurture the local startup community.
Carr says New York’s entrepreneurial scene is very different compared with the hubs on the West Coast. He sees a need for more mentors and investors in New York who raise questions about the marketability of fledgling companies. “A lot of money here comes out of Wall Street; they’re private equity people,” Carr says. “In Silicon Valley, they bring the money and the advice.”
According to Cohen, the perception of plentiful cash in the local market entices would-be entrepreneurs to seek investors. “It used to be ‘will I get funded?’ and now the sense is ‘when I get funded,’” he says. To help curb some of that overheated enthusiasm, Cohen says New York Angels is creating what he calls the New York City Devil’s Advocacy Council to bring together young companies with veterans of the business world for candid conversations. “It’s really to send a message that we want to be smarter and tougher for everyone and to facilitate their success in a way that gets them where they want to be sooner,” he says.
Such conversations may lead to blunt reality checks for entrepreneurs who need to reconsider their plans, he says. “Here’s a dime, call your mother, tell her you’re going to pivot,” Cohen says. He elaborates that a primary reason why startups fail is they often do not address evident problems such as replacing a bad salesperson or, worse yet, dealing with a troublesome partner in the business. “You don’t deal with the things that are definitely going to destroy you because you don’t want to and you’re scared to,” he says.
Cohen says it’s hard to find fresh business ideas amid the flood of startups these days. In 2010, the New York Angels saw 250 applications from companies seeking funding. As of September 2011, some 450 companies have applied for funding with the group. Cohen says since its inception in 1997, the members of New York Angels have collected invested about $40 million in some 70 companies.
Carr says good ideas do still exist in the market, though some may be repetitious or just too early in development to pursue funding. He says entrepreneurs who are serious about building companies will consider a pivot if necessary after listening to feedback from the investor community.
“You see more people who aren’t ready,” Carr says. “They shouldn’t be talking to angels, sending in applications, and wasting everybody’s time doing pitches when they are nowhere close to that.”