Merlin Mentoring Programme: Case Study 1 - Accelerating the growth of early stage companies in South East England
It sounds too good to be true. 70 high calibre individuals, with a track record of growing and running successful companies, working unpaid to mentor over 250 people who are trying to get their own high growth businesses off the ground? And yet that’s just what the Merlin Mentoring Programme has achieved since it was launched with help from the European Social Fund less than three years ago.
What is Merlin?
Merlin is a mentoring programme, run by Finance South East (FSE), for entrepreneurial individuals and companies who are supported by SEEDA’s Enterprise Hub Network. To qualify, they must have pioneering and scaleable ideas with national or international potential. The Merlin project team at FSE matches them with a suitable mentor at a critical stage in their growth. The mentoring is designed to work as part of a holistic support package provided by the Enterprise Hub Network.
Why was it created?
Building a high growth business from scratch is tough. The challenges are daunting and the risks are huge. Many of the people with great ideas often lack the business experience needed to attract investors and to turn their ideas into commercial products and services. That’s where Finance South East and the Enterprise Hub Network come in. Backed by SEEDA, these organisations aim to provide all the funding and support an early stage company needs to turn a great idea into a successful high growth business.
Back in 2003, they realised they had a gap in their offering. Many of the entrepreneurs coming to them didn’t just need professional advice. They also needed someone they could talk to on a regular basis who had experience of growing a high technology or knowledge-based business – someone who understood first hand the challenges entrepreneurs face, and who was willing to share their experiences openly. But there was no way that most of these companies could afford to pay market rates in excess of £1,000/day for such a service. That’s why Finance South East, The Enterprise Hub Network and Leadershape got together to create the Merlin Mentoring Programme.
How was it funded?
Finance South East, together with the Enterprise Hub Network and mentor training specialists, Leadershape, surpassed competition from 16 other bidders to win a £1m grant from the European Social Fund, co-funded by SEEDA, to get the programme off the ground and to run it for three years (2004-2006).
What do we mean by mentoring?
Merlin is about helping entrepreneurs to learn and develop so they can turn their ideas into successful high growth businesses.
Merlin Mentors work in a non-directive way. They ask open questions, share their own experiences and help entrepreneurs come to their own conclusions about their long term goals and their immediate business priorities. Merlin Mentoring is not a substitute for professional advice or consultancy and is nearly always provided alongside other services.
How does the programme work?
The mentors
Merlin Mentors are people of exceptionally high calibre. Typically, they’ve built their own high growth businesses from scratch or held a senior position in a fast growing technology or knowledge-based company. Many are also active business angels and non-executive directors.
Primarily the mentors come through word of mouth contacts. First we put them through a rigorous selection process to make sure we only take people who can really add value to Enterprise Hub companies. (Of the 183 people who have applied so far, we have only accepted 70). At the end of their initial training course, the mentors are asked to sign up to the Merlin code of conduct which governs the mentor / mentee relationship. They are then matched with their first companies.
Each mentor is asked to commit 20 hours a month to the programme for at least 12 months. In practice, most of them do more than this and work with several companies at any one time. Merlin Mentors receive no payment for their time, either from the programme or the companies. Some of them do go on to take formal positions with the company once the mentoring period is over – usually as non-executive directors. But this process is strictly governed by the code of conduct because it is vital that companies feel that their Merlin Mentor is genuinely an independent person, with no hidden agenda.
Finance South East’s Merlin project team keeps in contact with all the mentors and brings them together for regular networking events. This is an approach which is highly valued. “If I have a problem, I know there’s a group of really talented people at the other end of the phone I can talk to,” explains Tony Smith , Merlin Mentor and non-executive director.
The mentees
These are typically people who are in the very early stages of developing a technology or knowledge-based business and are facing a number of complex challenges. Some of the entrepreneurs have business experience, others are from a technology background and know little about growing a company. The most important thing, from Merlin’s point of view, is that they are open to learning.
Companies work with their mentors for approximately six to twelve months and stay in contact via face-to-face meetings, emails and phone calls. It’s up to them and their mentors to decide what’s going to work best. And it’s up to them to decide what issues they want to discuss.
The FSE Merlin project team
The programme is run by the Merlin project team at Finance South East. The team’s job includes recruiting and supporting the mentors, overseeing their training, working with the Enterprise Hubs to match the mentors with suitable companies, running networking events for the mentors, managing the budget and doing all the paperwork that’s associated with a large ESF programme. The team has so far collated over 3,000 bits of paperwork for this project.
The Enterprise Hub Network
It’s the job of the 21 Enterprise Hubs to identify entrepreneurial individuals and companies who could benefit from a Merlin Mentor, and to work with Finance South East to match them with the right person. Once the match is made, the Enterprise Hub can connect the company with any additional services the mentoring process has identified that they might need.
Leadershape
The mentors are trained through an intensive residential programme run by Leadershape. They are then provided with follow-up support, expert sessions and mentoring discussions for a further 12 months.
Is the programme working well?
According to all our feedback - YES!
What have the companies told us?
Time and again the companies tell us that they have got so much more from the mentoring relationship than they ever expected.
“We certainly wouldn’t be where we are today without our mentor.” Graham Grant, Boueti.
“My mentor is of an unbelievable calibre. I never expected to get someone so experienced.” Paul Welch, Magic Taxi.
“It’s fantastic that we have an avenue to speak with people from within the business world who ‘have been there, done that’. Moreover we can use these people as a solid sounding board to get thoughts and issues off our chest.” Matthew Horsell, First Light Solutions and Dragons’ Den winner.
“As an outsider our mentor was more quickly able to assess the challenges and especially the financial aspects of the business model. He has provided clarity of thought and worked with us to devise tools and methodologies to better state our case for investment.” John Burbidge-King, Interchange Solutions Ltd.
“I would definitely recommend the Merlin scheme to other people – especially people like me coming out of university with an idea but no business experience. It’s a fantastic programme.” Sam Proctor, The Proctor Group.
What do the mentors say?
The feedback from our mentors is equally positive.
The motivation for becoming an unpaid mentor is typically a mix of wanting to give something back, a desire to develop new skills, and a genuine passion for helping people other entrepreneurs to get started, because they remember how tough it was when they were at that stage. Most of the mentors tell us the whole experience from the training, the peer networking, and the mentoring itself has been hugely rewarding. 75% of them carry on beyond their initial 12 month commitment.
Mentors and their companies have been encouraged to develop their relationship into something more permanent if things have gone really well (all within the strict Merlin code of conduct). As a result, 8 mentors are now working as non-executive directors with companies they were introduced to via the programme; and 3 mentors have invested in their companies.
The mentors consistently tell us that they have been hugely impressed by the way Finance South East has run the whole programme. “I really like the framework of the programme. I feel I have back up and some protection if things don’t work out. I don’t think I would have got into mentoring on my own”. Mike Kiernan, Merlin Mentor, business owner and non-executive director.
Many mentors feel they’ve developed as much as the companies. “Mentoring has given me a different dimension … it’s completely changed the way I negotiate in my own business dealings. I used to be much more technocratic in my approach. Since becoming a mentor, I feel I have developed much stronger interpersonal skills.” Maria Dramalioti-Taylor, Merlin Mentor and technology investor.
They’ve also got a lot out of the networking with other mentors and the whole community of people who are involved with business support in the SEEDA region. One mentor bought a company from someone he met by chance at a Surrey Hub networking event!
The value of mentoring to Finance South East
Merlin has been a major step forward for Finance South East in its mission to build an effective funding escalator for the region. “Through Merlin we have created a vital resource for the region. The programme has proved to be a vital addition to our capabilities, positioning FSE alongside the UK’s best fund managers and placing the South East at the cutting edge of funding for early stage companies” reports Sally Goodsell
, CEO of Finance South East. “In the US, mentoring and funding are totally integrated because investors understand that money and a good idea are not enough on their own to guarantee success. But here in the UK, we’ve been much slower to recognise the importance of mentoring in the investment process. That’s one of the reasons that we’ve been less successful than the US at producing high growth technology companies. The Merlin programme is helping us to change all that. Now that we’ve built such a fantastic community of mentors, we intend to make mentoring available to a lot more of the companies we invest in.”
Finance South East has also gained considerable expertise in managing a complex European funding programme. Its professionalism has been recognised by SEEDA’s ESF team which has cited several of the Merlin project deliverables as examples of best practice e.g. the quality of access policy; the state aid paper; the internal evaluations; and the methodology for collecting and presenting the quarterly project outputs. This expertise has enabled it to take on other European programmes which it might otherwise have shied away from.
The Enterprise Hubs’ perspective
Enterprise Hub Directors tell us that they value Merlin immensely. Enterprise Hubs are run by small, entrepreneurial teams which leverage support and expertise for their client companies. They have built up a superb portfolio of services and are adept at knowing which service to pull in at the right time. Enterprise Hub Directors feel that Merlin has been a great service to have in their portfolio and it has worked best when the Enterprise Hub Director, Finance South East, the mentor and the mentee have kept in regular contact, making sure the mentoring is working as part of a holistic package.
The biggest impact from the Enterprise Hubs’ perspective is the way in which the mentors have helped the companies to think more clearly about their challenges and built up their confidence to make their own decisions. “Mentors bring an added perspective which is so valuable. Because they are totally unbiased, they can challenge companies.” says Martin Brassell , Hub Director Aylesbury Vale and High Wycombe.
What’s the future for Merlin?
The ESF funding comes to an end in December 2006 but that certainly won’t be the end of Merlin. The mentors are keen to continue, and the demand from companies is growing. So SEEDA, through its Enterprise Hub Network, will fund FSE to continue running the Merlin Mentoring Programme, at least through 2007 and hopefully beyond.
Finance South East is also using the resources and expertise it has gained running Merlin, to offer mentoring programmes to other organisations which are supporting growth businesses. Its portfolio already includes providing mentors through the CommercialiSE framework – a regional collaboration led by 11 South East universities to provide integrated support for ground breaking business ideas that exploit the South East knowledge base; the National Council for Graduate Entrepreneurship (NCGE); the FEW! (Funding Enterprising Women) programme; and coaches for SEEDA’s High Growth Business Coaching scheme.
To find out more about Merlin, and FSE’s other mentoring programmes, call us on 01276 608511.
To find out more about The Enterprise Hub Network, take a look at the website:
www.seedaenterprisehubs.co.uk
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