Why pitch contests and accelerators fail to build robust entrepreneurial communities
Are entrepreneurs born? Or are they made?
Whether we consciously ask ourselves this question or not, the way we answer it guides the way we design entrepreneurial ecosystems.
In most communities across the U.S., the default answer is that entrepreneurs are born. All we need to do is find them and give them money. Once we give them money, they will magically make us rich (or create jobs). And, when they struggle and fail? Well, they just need MORE money.
To that end, investors and community stakeholders put a lot of time, money, and effort into offering events, conferences, accelerators, and college curricula that attempt to identify entrepreneurial talent rather than cultivate it. They’re often looking for the path of least resistance to connect their funds with founders who fit the part of the “ideal” entrepreneur.
This attitude might make sense if there were a way to actually define the “ideal” entrepreneur. But despite decades of research, there is no consistent evidence of a standard “entrepreneurial” personality. Most of us have a mental picture of what makes a good entrepreneur, but there’s no evidence to point to one consistent personality profile that predicts entrepreneurial success.
Unfortunately, this fundamental assumption that we just need to find entrepreneurs underlies most of the work going into building entrepreneurial ecosystems today. It shapes who we look at, what we do, and how we do it. It means we put a disproportionate amount of resources into shortcuts and silver bullet approaches, instead of investing in the boots-on-the-ground, day-in-day-out work of growing an army of people with solid entrepreneurial skills — who will build solid, profitable ventures.
Let’s look at a few examples:
- University programs
- Pitch contests and short-term accelerators
- Conferences and networking events.
Every discussion I’ve been in about growing the pool of local entrepreneurs has asked the same question:
“What are we doing with college students?”
In the last 10+ years Entrepreneurship majors and minors have been cropping up all over the country. Students love them, and they often bring in outside funding and recognition to universities.
But a university setting is one of the worst places to grow innovators and change agents. Universities are some of the least innovative environments, with their cumbersome and antiquated structures, traditions, and rules. Ask any university faculty member who has tried to design and implement anything truly creative and she will show you her battle scars. (Me included.)
Your typical entrepreneurship curriculum focuses on launching a t-shirt business, writing a fictional business plan, or creating a fancy pitch for a business you don’t actually believe will work. The experience isn’t about the evolution of ideas over time, the grind of failing and trying again, the decision overload, the crisis leading to the pivot, or the ending of the venture — all of which are at the heart of the entrepreneurial journey.
We’re drawn to college students because of their enthusiasm, creativity, and drive — all valuable traits for entrepreneurs. But they are still inexperienced teenagers! They are building their skills, experimenting and crafting their identities, discovering what true resilience looks like, and maturing at their own pace.
Who, in their right mind, would give thousands or even millions of dollars to a 20 year-old?
Asking young people to choose an idea, take money, hire a team, and commit to achieving other people’s priorities right out of the gate is setting them up for painful failure — the kind of failure that can actually delay their development as adults and entrepreneurs.
I’ve seen it happen too often — young entrepreneurs get too much attention and too much money, with very little genuine coaching and mentoring. Their egos explode because they believe they’ve been chosen for their natural brilliance. When they inevitably fail, they get lost and struggle to find the way forward.
Entrepreneurs learn by doing. But that doesn’t mean their first entrepreneurial experience should be leading a venture-backed company. Cultivating entrepreneurial POTENTIAL is about giving people the opportunity to learn from others and to fail…and fail again, without hundreds of thousands of dollars on the line.
Unfortunately, universities can’t recreate the entrepreneurial experience on their campuses. They need to collaborate with the entrepreneurial community to prepare students for careers in entrepreneurship. Instead of pushing students to start their own ventures, universities can focus on matching students with internships and jobs inside startups, where they can get exposure to a wide-range of entrepreneurial challenges and grow their skills BEFORE they face the significant challenge of being the boss.
At Doyenne, we are developing programs to connect young women to internships in startups led by women. We want them to experience startup life while also gaining life and business experience — preparing them to emerge in their 30s or 40s or 50s to launch solid ventures grounded in their personal wisdom and supported by their ability to overcome the hurdles life sends them.
Pitch Contests & Short-term Accelerators
Pitch contests are a staple of entrepreneurial communities. In fact, winning a pitch contest can be seen as a necessary step to gain credibility around you and your idea.
The basic format is to put a bunch of entrepreneurs on a stage and see who has the best idea, and maybe give the winner some money. They provide visibility to entrepreneurs so that investors can find them.
By their nature, pitch contests reward style over substance. They elevate the people who can put together an exciting presentation, based on pie-in-the-sky projections, instead of the ones who present an honest and robust assessment of the business model, roll-out plan, and strengths and weaknesses of the team.
The pressure to give the most compelling presentation can lead participants to tell judges what they want to hear, and in many cases this has little to do with what is in the best interest of the business itself.
Pitching has turned into a bluffing game. Investors want to see big, exciting projections, but they know that many entrepreneurs inflate their numbers to make them more compelling. So they automatically recalculate the projections based on their impression of the entrepreneur, and systemic biases can play a big role. Research shows that this game more negatively impacts founders who are women and/or people of color.
In theory, startup accelerators combine several weeks of coaching with a pitch contest. But the stated purpose of most startup accelerators is to help entrepreneurs develop an executive summary and a compelling pitch. Once again, the focus turns toward crafting the pitch, not building the business.
The business model of most startup accelerators presents a problem of perverse incentives. Accelerators invest small amounts of money in super early-stage ventures, and they get rewarded if the ventures get funded — regardless of whether those ventures are successful in the long term.
Don’t get me wrong. I am NOT saying that developing a pitch isn’t a critical component of the entrepreneurial experience. But a pitch is only as powerful as the clarity, substance, and integrity behind it. If the entrepreneur still doesn’t understand what they really want out of the business, what the fundamental business model is, and how to actually grow it with limited resources, then a pitch is just fancy wrapping paper on an empty box.
I work with entrepreneurs on how to pitch their venture regularly because it can be a great developmental tool, forcing the entrepreneur to think about what they know and what they don’t. If done well, a pitch event can become a means of cultivating entrepreneurs, not just an effort at identifying them.
This is what we do at Doyenne with our 5x5x5 pitch contest (5 women, 5 minutes each, $5,000). We host this event at festivals because it gives visibility to the range of women entrepreneurs. But it’s not your average pitch contest. We select five businesses to participate, and before the contest, we provide two intensive coaching sessions. We work with them to find clarity around what they’re building, and then craft a pitch to tell that story. While only one woman wins the money, all of them leave with a clearer sense of themselves and their ventures. Many women say that the coaching is more valuable than the $5,000 could ever be.
Conferences & Networking Events
The typical conference experience involves listening to a bunch of presentations, eating crappy food, and exchanging business cards. Does that really bring about meaningful personal and professional growth?
Yet, the community spends an inordinate amount of money putting on massive conferences for entrepreneurs. But once again, the business model corrupts the mission. Sponsors want to gain the maximum exposure for their businesses, so organizers brag about bringing thousands of people together for a day. But does this have any actual impact on growing the pool of talented entrepreneurs and building more viable businesses?
One of the primary claims is that when we bring “all the players” into the room at the same time, the random “collisions” act like a shortcut to developing new relationships. Want to know how I’ve made connections at conferences? Bonding with attendees over how much we hate conferences!
We are so used to the conference model that we don’t question it. We plan them, sponsor them, and attend them, again and again. But do we ever get a return on our investment?
Real growth happens in intimate settings where people can ditch the posturing and just be real. They can be honest about what is happening behind the scenes and get advice on how to tackle challenges and leverage wins. This does NOT happen with hundreds of people in the room.
If we want to cultivate entrepreneurs who can build solid ventures, we need to invest our money, time, and energy into creating intimate spaces where entrepreneurs learn from each other. We need to shift our dollars away from “bigger is better,” to “smaller is more impactful” if we want to generate real outcomes for entrepreneurs.
Develop skills in current and future entrepreneurs
Entrepreneurs face a massive skills deficit. To be successful in the long term, they need to develop:
- The ability to evaluate ideas in a robust way.
- The ability to create structure where there isn’t any. To build replicable processes.
- The maturity to cultivate relationships, lead and manage people, and set a direction for the team.
- The self-awareness to understand what matters to you and what doesn’t. And, to not be led astray by other people’s priorities.
- The persistence to keep trying new solutions and the resilience to bounce back when you are taken out at the knees.
The entrepreneurial intuition, business acumen, and personal maturity of an entrepreneur are forged over time and through experience. People aren’t born with these skills and there are no shortcuts for acquiring them. Ready-made entrepreneurs don’t just fall out of the sky.
Entrepreneurial ecosystems need to stop trying to “identify” entrepreneurs. If we want to create jobs in our communities, we need to invest more of our resources in cultivating entrepreneurs over time.