Less venture capital and more 'mentor capital'

New advisory group builds team to address gaps in growing companies

Growing companies need many things, including passion, drive, focus, money, and luck. One of the other things they need is guidance from an experienced advisor or three, for help avoiding potholes on the road to profit and success. Finding successful executives with relevant expertise isn't easy, however, which prompted a group named SageCreek Partners to offer what it calls "mentor capital" rather than venture capital.

SageCreek Partners focuses on technology companies below $10 million in revenue looking to grow. These companies may have some early venture capital already, but they'll likely need more. SageCreek doesn't provide money, but it strengthens its clients to be attractive to venture capital groups. Sometimes it plays VC matchmaker as well.

Unless you're in Utah or Silicon Valley, you probably can't make a pitch to SageCreek Partners or many venture capital groups. This doesn't mean you can't learn a few tricks and new ways to improve your business, so let's get started.

Mentors are always a great idea, but finding them can be tough. Some people get good advice from fellow members of business and service groups like Rotary International. Some find partners to help fill in their own management gaps in groups like Business Network International. Some get involved with SCORE directly or through the Small Business Administration loan process. However, these groups don't focus on filling the gaps in your executive management ranks. That's why I think SageCreek Partners is onto something that will be copied by others before long.

I certainly don't mean good advice isn't already out there for every executive in every type of business. Books abound, as do Web sites designed to help businesses succeed (like this one). Your industry association group almost certainly offers best-practice advice in a number of areas, or you can check with vendors in specific areas for reference material. If you want information, you will find it.

But finding people may be more difficult. Greg Butterfield, managing partner of SageCreek Partners, was previously group president at Symantec. He was president, CEO, and chairman of Altiris before Symantec bought the company. My first question was why he's doing this. Aren't the directors on the company board supposed to provide this type of guidance?

“Venture capital funds have gotten so big they can't do small investments anymore,” said Butterfield. “They're waiting for companies to hit certain metrics before they'll invest, but there's no real mentor or full board of directors to help get the companies to that point.”

If you're in Silicon Valley, entrepreneurial board member candidates may be sitting beside you at every Starbucks. Outside the high tech areas, entrepreneurs and mentors are harder to find. Take a new look at businesspeople in service and networking groups. Talk to your financial advisor about potential mentors in other client companies. Read your local business journal for candidates.

I told Butterfield it sounds like SageCreek Partners helps growing companies build an executive decision support system, and he agreed. “When you need a lawyer with years of experience in business mergers, acquisitions, and public offerings, we have that. Need someone with experience selling outside the U.S.? We have that. Need sales and marketing? We have people with experience in multi-billion-dollar companies available for you.”

Although SageCreek Partners sees 10 or so pitches per week, you probably can't get to Salt Lake City for a meeting. I asked for three lessons Butterfield tells companies he meets with that I can pass along.

First, companies need to learn how to get profitable faster. This can be increasing revenue or cutting expenses or both. Unfortunately, slower “customer uptake” is the current reality, but getting to breakeven or profitability means staying power and better chances at more funding.

Second, companies don't understand how their products and services fit into the market. You can't beat the market leader head on, but you can certainly pick up business in areas they flounder a bit. Enhance and complement products and services the customers use. It's tough to convince customers to dump the leading product for one from a start-up, but small companies make that mistake all the time.

Finally, in a bad economy, you can still grow your customer base. Butterfield said, “This is the time to hone in and look for strategic partners, better marketing, maybe even acquisitions. When things get better, you'll be in that much better shape.”

SageCreek asks for a retainer and some equity, not a big management consulting contract. They benefit when their client companies succeed.

The same day I talked to Butterfield I received a newsletter from Chenault Systems, a Dallas-area custom development company focusing on oil and gas clients. I called Tom Chenault because his newsletter mentioned how they've added management consulting because some clients needed help streamlining their business processes before he can start creating databases to improve their business. Companies need to maximize their teamwork and streamlining, said Chenault, “so they don't just make the mess go faster.” Sounds like good mentorship advice to me.

Can you ignore such advice and go it on your own? Of course, but it's worth thinking about asking for help now and then. When you learn from other people's mistakes, your company gets smarter and stronger. When you learn from other people's successes, and apply some elbow grease, you increase your company's chance of success.

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