March 2024

StartUpNV Announces Three New Members on Board of Directors

How To Find A Startup Mentor

Why are mentors so important?

Let’s be honest: you probably aren’t an expert in everything. Having range, also known as being a generalist, is a common quality of entrepreneurs. But it also means that your knowledge of each topic is a little bit limited. Cue the mentors! Leave behind your pride and find a mentor who is a true expert in marketing, business models, or pricing. Hit up that IP attorney or leverage a VC veteran to provide deep industry insight.

Someone who has “been there, done that” will provide immense value to your own process of building a company. By utilizing the help of a mentor with a specific skill set, you’ll be able to take a deep dive into the specific problem you need to solve. Entrepreneurs like to talk about innovation, but some forget that the key to innovation is utilizing diverse perspectives. Sitting down with an expert who can provide a unique perspective from their own years-long journey is priceless. They will fill in the gaps between what you already know and what you need to know.

How do I find a startup mentor?

There are many places to look, so here’s a quick guide:

Try your local network. Start here first and reach out to someone you know, whether they are friends, family, or acquaintances. Maybe your friend works in a marketing firm, and you know they have a legal department. Ask to get connected with their corporate attorney! Getting a warm introduction to someone is a lot easier than a cold one, and you may get hands-on experiences with a mentor you’re already familiar with.
IncubateNV through StartUpNV. Our online incubator is hosted on a comprehensive platform with a free curriculum that leads you through the basics of starting and scaling your business. To support that process, we have a community of mentors available to you, which can be narrowed by industry. Available for free, IncubateNV’s online platform is targeted towards Nevada-based entrepreneurs, but open to anyone. Join here today: https://startupnv.org/startups/incubatenv/
IncubateVegas. This 5-week bootcamp runs twice a year for Las Vegas locals. You will be part of a small group, led by a mentor who will meet with you weekly to support your group through the program. Being hands-on means putting in work – and that’s what this bootcamp is meant to do, with a tight curriculum and strong support system. Learn more here: https://startupnv.org/incubate-vegas/
Online networking. While warm introductions yield higher results, there is still so much power in finding someone who fits the exact qualifications you’re looking for. Often used for job hunting or employee-finding, you can repurpose LinkedIn to scout for a mentor! It does help that mutual connections are visible, so perhaps use that to your advantage. Sort people by location, expertise, past jobs (someone who worked at the same company as you will be a good connection point), etc.

How to set yourself up for success:

Identify your specific needs. Are you looking for general accountability, help around a specific subject matter, or some industry insight? Knowing the answer to this first will help you find the right mentor, and may even help you develop the right questions to ask once you get connected.
Cross reference your needs with a mentors’ expertise. If you’re able to, check out a mentors’ experience prior to reaching out to them. You can do this on the IncubateNV platform, where each mentor’s profile will display their expertise and bio. Maybe even search through their LinkedIn where you can review their previous jobs, industries, and interests. The main goal is to make an informed choice of which mentors you connect with. (Pro tip: Choosing a mentor with entrepreneurial experience can be especially helpful, as they’ll understand the unique circumstances of a startup founder.)
Think about your preferred mentoring style. Light communication may work for some while regularly scheduled meetings are better for others. It’s okay to have a one-time meeting, where you get the information you need and move on. Additionally, how hands-on do you want them in your mentoring sessions? Some mentors are willing to roll up their sleeves more than others, but what would be most beneficial to you?
Be diligent in your meetings. It’s up to you to lead the relationship. Make the first move, suggest a time and date, and be on time! “Come prepared with questions, asks, and successes,” says Christina Del Villar, a long-time startup mentor and marketing expert. Setting the expectation upfront is very important to developing a trusting relationship, and proves that you are serious about your startup.

How many meetings should I have?

An effective mentoring relationship can be long term, or consist of just two meetings! Quality over quantity definitely applies here, and if you’re connecting on a specific topic, it’s not always necessary to have a prolonged meeting schedule.

If you’re going for a multiple meeting relationship, make sure to set yourself up well. We often suggest having an initial meeting as an intro, where you might clarify your needs, expectations, and background of yourself and the company. You may even bring up your preferred mentorship style. Coming to the meeting prepared with your tasks will show your mentor that you are serious.

How to have a good relationship with your mentor:

Make sure you’re compatible! The mentor and mentee need to “click.” Irina Tsetsura, one of our product operation mentors, says that “both [people] should be excited about each other’s work, experience, and what you are working on.” Developing a positive relationship from the beginning will be rewarding and allow you to have more productive rapport with your mentor.
Follow-up and be reliable. Irina also stresses the importance of “respond[ing] and diligently follow[ing] through on the goals and commitments established during mentorship sessions” as a mentee. By doing the homework your mentor gave you, it proves that you value their time and will continue to uphold your end of things. The relationship works both ways: your mentor supports you, and you do the work.
Be a beginner. One of StartUpNV’s marketing mentors, Stephanie Jiroch, adds this about mentor relationships:

“When it comes to building a good relationship with a new mentor, don’t be afraid to be a beginner. The reason you joined forces with a mentor is to gain access to resources and knowledge to support your growth and evolution – both in business and as an entrepreneur. Too often, I see entrepreneurs who are afraid of looking ‘dumb’ and do not ask the questions that will help them grow, launch, or scale. To get the most out of your mentor/mentee relationship, lean into the learning process, ask the questions, and be open to what could be done differently so that you can succeed.”

Don’t turn a conversation into a debate. Peter Ciulla, another StartUpNV mentor who specializes in hardware tech and cleantech, leaves founders with this nugget of information regarding successful conversations:

“It’s important not to make a mentor session too much of a debate. Remember that they’re volunteers and they’ve developed expertise in a specific area. As an entrepreneur, it’s best to take note of their advice and input, process it offline, and then decide what is right for your specific business.”

Keep your mentor in the loop, even if you’re no longer meeting. It’s so rewarding to hear the positive outcomes of the work you put in together. Even a quick email letting your mentor know that you implemented their advice and it led to results, will make their day!

Should I pay for a mentor?

While searching for mentors, you may find some who charge for their time. While some people may view that as a valuable investment, it’s not always feasible for founders on a lean budget. In my opinion, don’t pay for a mentor. There are plenty of qualified professionals who are willing to support founders for free out of their own desire to give back to the community, or who want to get/stay involved in the startup world.

Regardless of whether you pay for a mentor or not, the value is in the support and time savings they can provide you. Make sure to keep tabs on whether you work well together, if you’re making progress on your goals, and that you’re being true to yourself in the process. These will be telling signs that you’re on the right track.

StartUpNV always has free programs and free mentors, so start with us if you need a boost! Whether you choose a self paced program like IncubateNV, a year-long program such as FounderNV, or an IncubateVegas bootcamp, we will ensure that you have access to mentors that fit your needs to get you on your path to success. Visit our programs page to get started: https://startupnv.org/startups/services/

Are you interested in being a mentor for StartUpNV? We are primarily in need of mentors for ideation and early stage startups. This may look like:

Leading small groups of founders through a bootcamp
Throwing a hands-on workshop in your area of expertise
Being available for founders to reach out on our incubator platform

If any of that sounds interesting, please submit a mentorship interest form today! https://startupnv.org/become-a-mentor/

About the author, Audrey Randazzo:

Mentor Audrey Randazzo startup las vegas 2

Audrey Randazzo earned her Bachelor’s degree in Anthropology with a minor in Art from the University of Nevada, Reno in May 2021. While in school, she had internships at the American Chemical Society for Community Management, the Nevada Small Business Development Center for Marketing, and held a long term position at the UNR Career Center where she utilized her unique blend of analytical thinking and creative problem-solving skills.

Over the past three years, Audrey has made significant contributions to StartupNV, where she started as an intern and quickly progressed to the role of Program Manager. In her current position as Mentor Manager, Audrey plays a pivotal role in the growth and success of the accelerator programs by sourcing experienced Mentors with skills across the board. She works closely with a diverse network of professionals, guiding and facilitating their engagement with aspiring entrepreneurs.

In addition to her work with the Accelerator Mentor Program, Audrey actively contributes to the development and enhancement of other vital programs within StartupNV. She has played a key role in shaping the vision and execution of Founder University Nevada, IncubateNV, and IncubateVegas. With strategic insights and collaborative approach, Audrey ensures these programs provide valuable resources, mentorship, and support to startup founders at various stages of their journey.

Outside of her professional pursuits, Audrey enjoys rock climbing, traveling, and visiting every coffee shop in Reno. She dislikes spending over $8 for an oat milk latte, but still supports the local ecosystem.

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How To Succeed or Fail at Startup Investing

How to be a Successful Startup Angel Investor

The best approaches to being a successful startup angel investor might not always be the most obvious ones, in fact it often starts with the ground rules and guidelines of angel investing.

Over a 10 year period, successful pre-seed and seed stage angel investors make 3x to 5x on their cohort of investments which is about double the return of index fund public company investing. The rewards are the highest of all investment types, as are the risks, but the risks are manageable.

There are 3 approaches to be a successful early stage investor – and one sure way to fail.

Top 3 successful startup angel investing approaches

Passive investment through a trusted fund or syndicate

If you’re thinking that following the ground rules (noted below) is a ton of work, you’re right. Which is why the #1 approach is to invest in a fund or with a syndicate. In a fund or syndicate, the general partner(s) curate the deal flow, do the hard diligence work, and create “win-win” investable deals that can return the fund 3 to 5 times – or more. Funds consistently invest in 20-40 company cohorts over a 3 year period to mitigate risk and maximize returns. Syndicate investing on a deal by deal basis saves investors work, but on its own, does not mitigate risk across a large cohort in the same way a fund will. Many investors invest in a fund as a baseline and for deal flow, then add capital via syndicates to specific deals to spread risk and/or invest deeper in specific deals where they have more conviction..

Active investment through an angel group

If you like the activity of finding companies, listening to pitches, asking questions, and engaging in the diligence process, an angel group may be more appealing. Angel groups share the workload among members, usually divided into committees like the selection, deal flow, due diligence, membership, etc. Some larger groups have paid interns and/or administrators to conduct the research required for screening companies and due diligence. Most angel groups have 2 or 3 options for members to invest in companies that apply to the group a.) direct investment, b.) group fund investment, and/or c.) through deal by deal special purpose vehicles (SPVs). It’s harder to follow all of the ground rules in an angel group, but most are covered – and members must maintain their own discipline around cohort size and investment time horizon. Still, angel groups have a good track record and have a social and networking component that the other approaches can lack.

Active “DIY” angel investment with self curated deal flow

If you’re the type of person who doesn’t like to rely on or trust others, then the DIY method is for you. It can prove difficult for a single angel investor to see enough deals to invest solely using this approach. Many fund and angel group investors use this method as a supplemental investing activity, bringing a few extra deals into their personal cohort each year – and spreading their risk.

In addition, there are some best practices for successful early stage angel investing.

Startup Angel Investing Best Practices and Ground Rules

Investment Thesis

Develop a thesis for investment size, opportunity types, and follow-on scenarios

Successful investors are disciplined in the types of companies in which they invest, how much they invest in each company, and whether or not they will invest more than once in the same company. Your budget for investing will drive the amounts, with many angels investing between 2% and 10% of their net worth. As investors get older, investment percentages in this riskier asset class moves toward the lower end of the spectrum. With a large win, it can result in a “high class problem” of being over allocated.

Cohort size, Time horizon, and Valuation

Plan to invest in at least 20 companies; 30+ reduces risk and increases returns. The time horizon to deploy funds for a 20+ investment cohort should be 32 to 40 months. Each investment must be able to return at least 30:1, preferably 50:1 or better

The Power Law: Venture Capital and the Making of the New Future by Sebastian Mallaby tells us that 1 to 3 companies in a fund or cohort of 20-30 companies will make most, if not all of the returns. Even with the best diligence, research and picking, 75% of the cohort will likely fail. Due to the high failure percentage, to make at least a 3x return on the cohort / fund it’s critical to have enough companies and to be sure each one can return at least 30x (including anticipated dilution).

Let’s look at a typical cohort where 25% of the companies return money to the fund, with a 75% failure rate. For this simple example, our fund size is $1M, making 20 investments of $50k each.

3x Average Fund / Cohort #1: One company returns 50x, another returns 5x and two more return 3x each, the other companies fail. This fund returns $3M or 3x.
4x Very Good Fund / Cohort #2: One company returns 50x, another returns 30x and two more return 3x each, the rest go dark, the entire fund returns $4.3M or 4.3x
5x Great Fund / Cohort #3: One company returns 75x, another returns 25x and two more return 1x each, the rest go dark, the entire fund returns $5.1M or 5x

These examples illustrate why it’s critical that every company can make at least a 30x return. If investors compromise on this metric, it’s very hard to make returns commensurate with the risk. Some investors believe they can beat the Power Law – that they have a superior ability to “pick winners”. Proceed with eyes wide open, understand Power Law math – and you’ll do well.

Larger Numbers – Better Chances

See 100 companies for every investment made, 250+ is better.

To get good at picking startups and founders, you need to see a lot of them. It’s just like any other skill – repetition and experience makes investors better. Successful funds and angel investor groups regularly see 100+ deals for each one in which they invest, often the ratio is upwards of 250:1. Joining with a group or fund that attracts high quality founders in large numbers will ensure better investing results. It’s not fun saying “no” so much, but it’s a critical skill to making the fund / cohort return 3x or more.

Some very large early stage funds and accelerators take the large numbers rules to the extreme. Studies from Right Side Capital Management, 500 Startups, Y Combinator and others show that studious investors who follow the rules have a 75% chance of a 3x return when the cohort size is between 20 and 75 companies. As the cohort size increases, chances of a 3x return increase to 90%+ at a 500 company cohort size and closes in on 100% as the cohort size approaches 2000 companies. The more quality shots investors have on goal, the better.

Due Diligence, Valuation, and Deal Memos

Develop a due diligence method, be vigilant about it, and independently verify:

Founder backgrounds, qualifications, and expertise
Market size: TAM/SAM claims + realism of SOM
All claimed IP
Competition
Traction and customer contracts – talk with customers
Exit multiples for industry
Sensibility of market capture w/r/t exit valuation requirement

Very few enjoy this critical piece of the investment process. Be sure you, your angel group, and/or your fund / syndicate have access to the research tools to do the job right. The Angel Capital Association recommends at least 40 hours of diligence work for each investment made. Many investments will be partially researched – until a problem is uncovered – then the deal is called off, which increases the average diligence time per closed investment to closer to 80 hours. When the investment is fully researched, diligence is complete, and conviction is reached to make an investment, it should be documented with a deal memo summarizing the research, diligence, and noting the reasons for and risks of the investment. Deal memos become a critical learning tool as the investments make the desired returns – or when they fail.

Each piece of research is important, but one that is often overlooked is the valuation research. What is the entry price of the investment? How much of the company will the investment purchase? How much dilution will occur as future rounds are raised? What does the exit point have to be (including dilution) for the investment to generate a 50x return? What level of sales does the company have to reach to justify that exit price? What percentage of the market (SAM) does the company have to acquire to hit that sales number? Is it reasonable for any company in the market to own that required percentage of the market (SAM)? Can the founders execute at the level required over the time period to reach that market percentage?

Putting it all together

Write a deal memo for each investment made to document the details above.

You can make a great return and have a ton of fun investing in startups. There are few activities that stimulate the brain, the imagination, provide social engagement, and very high returns like startup angel investing. The risk is high, but the rewards are much higher than Private Equity (PE), Hedge Funds, Real Estate, and public stocks – when investments are made correctly. Investing in a fund or with an angel group will not require as much work as DIY, but it’s important to know and understand what is required – even if you don’t DIY.

Angel and Startup Investing Resources and Opportunities

StartUpNV provides several options for startup and angel investors.

AngelNV – team up and learn with other angels. Some but not all of the work is done for you – and you’ll meet dozens of other like minded people investing in an annual conference fund, risking as little as $5k. Find out more at AngelNV.com
FundNV – a $2M pre-seed fund where investors can participate in hearing company pitches, asking questions, and providing feedback to the general partners. Investors don’t have to source deal flow, conduct due diligence, etc. Fund management makes the decisions and manages the $100k per company investments on behalf of its members (aka “limited partners” or LPs)
Sierra Angels – a traditional membership angel group investing directly and via SPVs 4. 1864 – a $10M see fund similar in structure as FundNV, except making larger investments in more mature companies
1864 – a $10M see fund similar in structure as FundNV, except making larger investments in more mature companies
StartUpNV Syndicate – investors in any StartUpNV based fund (and their invited friends) participate in “side car” investments and one-off deals that may not be a fit for the fund or angel group thesis.

About the author, Jeff Saling:

Owner Jeff Saling start up nv 1

Jeff co-founded StartUpNV (2017), a non-profit state-wide startup accelerator and incubator; FundNV (2020), a pre-seed venture fund; AngelNV (2021), an annual conference seed fund that educates investors; and the 1864 Fund (2023), a seed venture fund. Since inception, StartUpNV has engaged 1000+ companies, runs 80+ events per year, and has worked with 40 Nevada companies raising $77M+. He is co-President of the Sierra Angels (2023), one of the nation’s longest operating angel investing groups. Jeff is a founding member and Vice Chair on the NV Governor’s Council on Startups and Venture Capital (2022), worked with NV Lt. Gov Kate Marshall to introduce and pass SB9 (Blue Sky Laws) in the 81st NV Legislature (2021), worked in the 82nd Legislature (2023) with Assembly Speaker Steve Yeager and Cisco Aguilar, Nevada’s Secretary of State to introduce and pass AB75 (Nevada Certified Investor). Since 2018, Jeff teaches ENGR-461 (High Tech Entrepreneurship) during fall semesters in the College of Engineering at the University of Nevada, Reno. Jeff was a SaaS startup founder and executive with 4 successful exits by IPO and acquisition between 1992 and 2016. Jeff’s private company professional experience includes leading worldwide sales, SaaS operations, and product development.

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