Startup Sharks- Who They Are and How to Spot Them
Being preyed upon by the unscrupulous and the well-intentioned as a new startup
I often refer to the incredibly supportive community I found myself in when I first became an entrepreneur, and then an accidental tech startup founder. I stand by the accolades I have lavished on certain people and organisations I have relied on along the way.
But I have also come across people and organisations that I call Startup Sharks. When I went through an accelerator, we were warned about these, and one of the benefits of the accelerator was their commitment to help us identify and avoid these predators. This was often easier said than done.
In my view there are two types of these sharks: the Unscrupulous and the Well-Intentioned. Perhaps you can avoid both with a bit of a heads up. I will tell you what I learned about spotting them.
First, here are the differences between the two:
The Unscrupulous- Money Takers
These are the companies, individuals, and organisations that know that as a startup you may have come into a bit of cash either as part of your acceptance onto an accelerator or something like it, or through a grant or loan or any other kind of small starter fund or seed round.
They smell your giddiness of Just Getting Started, and realise that what in the scheme of things is a tiny sum, is to you the potential for unicorn greatness if you just spend it on the right thing. The Unscrupulous Sharks try to convince you they are that thing.
The Well-Intentioned- Time Wasters
The Well-Intentioned are the agencies, companies, organisations, that- usually through some sort of CSR (Corporate Social Responsibility programme)- are hopping on the startup bandwagon to show just how cool and supportive they are to the little guys and gals. They may be a government quango or a global corporate monolith that needs some karma points, tax write-offs, reputation boost or to fulfil its CSR promises to a board or other entity it is trying to ‘repay’ for some favour or to otherwise get in someone’s good books.
They mean well, really. But often they are more interested in having some glossy smiling testimonials in their latest CSR annual report than actually helping a startup out.
Here are a few examples of the sharks I have been bitten by:
The Well-Intentioned Government Agency
There was a government agency who was a sponsor of a startup weekend that I participated in. They sent great staff to mentor and coach at the event, donated the prize, and invited me down to their fancy offices in London to get some ongoing support. During that visit (which I had to fund myself, but totally worth it, I figured) they promised me the world. They listed all the wonderful contacts and connections and support they would offer to see me on my way.
They invited me back a few months later to speak at an event and tell the audience just how important and impactful their support had been to me.
They asked me for testimonials, a photo and logo to include in their reports, quotes and updates a year on.
And not one item of their promises ever came to fruition. Emails and phone calls pursuing them went unanswered.
The Reputation-Riding Charitable Foundation
I was delighted to be accepted onto a 12-month social enterprise support programme that offered a substantial match fund and copious amounts of offerings of all kinds. It involved a stringent application and interview process, and due diligence by the agency.
It all came crashing down near the end of the programme when it was time to get the money when it turned out they had messed up the due diligence process, and their board was not satisfied that my company’s articles strictly met the terms of the award.
There was opportunity to set it right, and I was pleased when the director acknowledged the problems caused by the programme’s negligence and accepted responsibility. But when it came time to follow up to rectify the situation I was left floundering past deadline dates by the very people assigned to help me through the process. Again emails went unanswered to try and get clarification of options and solutions in a timely fashion.
In a last ditch effort to get more information on what I could do to meet the requirements I got an email reply telling me the last deadline had passed. I had put in an inordinate amount of time and my own money to engage with the programme over many months to be told there was no chance at all of getting the match fund- which was the whole purpose of the programme.
I told them I wanted to leave the programme. They absolved me of the three years of ongoing reporting required but asked that I continue to “appear” to be a part of the programme and remain on the website and in the glossy brochures.
The Soul-Sucking CSR Agencies
The foundation had also put us teams in contact with lots of startup sharks and we were being nibbled at left and right. I fell for a few of the “support offers” by corporates who wanted to be associated with this highly-regarded foundation before I called them out on it and stopped engaging.
These involved self-funded trips to London and hours filling out applications to have not one of them actually provide my company with anything at all. I was asked to film video testimonials and provide a photo and logo and blurbs. They got to put them on their website and in reports and tell the world how generously they supported fledgling social enterprises.
But I for one did not get one thing out of them, despite the promises made. In fact, the time and money I wasted on the programme makes me want to weep.
This experience has been the a conglomeration of the worst of all the worlds of the Startup Sharks. I would recommend avoiding such things at all costs.
Tips and tricks that I wished I had known to avoid sharks
- Ask exactly what you will get out of any promised offer. Don’t worry about sounding ungrateful or petty or as though you are looking a gift horse in the mouth. Stand up for yourself and protect your business and your time.
- Get in writing exactly what is expected of you in time and money. Will you be liable for travel expenses? For funding certain activities? How much time do you have to put in before you get out what is promised? Is it proportionate?
- Talk to other people who have worked with them before. Ask for references from the organisation- they should be willing to put you in contact with those they have helped in the past. Speak to them, and find out what they had to put in and what they got out in return.
- Trust your gut. If it feels as though they are looking for a testimonial and photo to put in their annual report or a video clip for their website, or are just trying to tick a CSR box, they probably are. That is not to say that some companies won’t actually deliver what they promise in return. But weigh it up, and make sure it feels genuine and proportionate.
There are people out there who will surf on your hard work and creativity for their own glorification. There are people out there who will mean well but will fall short of the mark. There is too much at risk for a startup with limited time and money to give away your energy for those people. Protect yourself and your business’ interests. Don’t feel as though just because you are a startup you must be grateful for every morsel thrown to you. You may end up being the meal!
I write about how I became the founder of a tech startup as a non-techie, over-40 female with no entrepreneurial experience, and all I am learning along the way. You can see more here: https://medium.com/@eshassere If you think this might be helpful for others on their entrepreneurial journey, please recommend and share by clicking the heart.
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