Eli Finn & Edgar Ceron — The San Jose Startup Ecosystem
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For the second episode of the podcast, Mash set up in a conference room at San Jose State University with two people who support founders at the south end of Silicon Valley: Edgar Ceron, Director of the Silicon Valley Small Business Development Center (SBDC), and Eli Finn, who runs the SJSU SpartUp Incubator. They get into what community actually means for founders, why the SBDC has advisors while the incubator has mentors, and money — from student pitch competitions to the federal SBIR research grants, where Edgar says a solo applicant in California has a 15% hit rate and the SBDC’s clients hit 50%.
This conversation has been edited and condensed.
What community means
Let’s start with introductions. Tell everybody why what you do is actually important.
Eli: I’m the startup incubator program manager here at SJSU. There are a lot of reasons university incubators are important, but the number one thing is that it helps people build up a community of people like them — people with the same interests and the same problems. Peer learning is huge, and it’s a big reason people come to a university. I think we’re able to help with that.
Edgar: I’m the director of the Silicon Valley SBDC, and we’re a nonprofit. We connect local entrepreneurs in the Santa Clara County area with specialized mentors and advisors to help their businesses reach that next level — whether that’s launching your business, legal formation, or raising funds through debt, loans, equity or government research grants. Our main goal is to make sure these entrepreneurs actually do reach that next level, because overall they help the local economy. They raise money, they create jobs, they bring revenue to the local economy, and we all grow together.
So that’s why the government funds the SBDC — it’s interested in economic development. And the backbone of what you do is the advisor connections.
Edgar: Exactly. We’re an economic development vehicle. Our advisors come from different parts of industry, with different levels of experience, and they create a support system that early-stage entrepreneurs need. The majority of our clients are early-stage, first-time founders.
I want to get into advisors versus mentors versus consultants. But first, community. Eli, what’s your definition of community in this ecosystem? What does it mean to build one for entrepreneurs?
Eli: It’s kind of multi-level. There’s the base community, which is anybody at San Jose State who’s interested in startups — a founder, a multi-time founder, or somebody who’s just considering it as an option in the future. It’s giving them the opportunity to connect at events that are pretty low-pressure, learn from each other and figure things out.
Making space for warm bodies to run into each other. That’s level one?
Eli: Level one is just giving people that really easy opportunity — and hopefully a fun one as well.
And the strategy is serendipity? If you put warm bodies in a room, they’re going to smash into each other and something might happen?
Eli: The first thing we know is that when you put a bunch of smart people in a room, cool things happen. We have a bunch of smart university students from business and engineering, and they have conversations and figure things out. But we also know that startups are really hard when you do it yourself — especially as a solo founder who doesn’t know other founders. So the second thing is, we know that they need people.
Edgar, how is community different for the SBDC?
Edgar: It’s similar. I define community with one word: support. Having people, individuals, resources, whatever — as long as you feel supported and you don’t feel alone, I think that is community. That’s one thing we offer.
“Think of us as your free advisory board”
Edgar: What makes us a little different is that a consultant, you pay to actually do the work for you. Our people, you don’t pay. They’re advisors. I tell entrepreneurs, think of us as your free advisory board: someone you can bounce ideas off. That person has been vetted. They’ve sold businesses before, or they’re investors in their own right — they’ve been around the block a few times. Whatever issue you’re facing, they’ve done it before and solved it. That’s your support system.
But they don’t do the work for you.
Edgar: No, our advisors don’t do work for you. We help you think through the problems you’re having, and show you a path forward.
You want to make founders better founders, and business owners better business owners — not do their work for them.
Edgar: Exactly. Say it’s a funding issue. You tell an advisor, “I’m looking for X amount of funding.” They say, “Great. What’s your pitch like? What’s your business plan? What’s your business model?” And that gets the founder thinking, “Oh, wow, I don’t have one,” or “I need to refine it.”
So in your model, advisors provide support, and that support lets a founder feel they’re not alone. Eli, your community isn’t necessarily based on advising or mentorship. How do you see your role differently?
Eli: The best-case scenario for us — and it’s kind of weird — is that they leave the community with their own network. Not that they don’t come back, but they can go home and have people to call or text to talk these things through. It’s not somebody who’s been vetted. It’s somebody who’s going through the same thing they are right now, and hopefully is one or two steps further along.
That reminds me of my kids’ Montessori school. They put several grades in one classroom, and the kids who had learned the material taught the kids who were learning it — reinforcing what they’d learned themselves.
Eli: To share an example from the startup world: there’s a founder we all know who was one of our most committed. He came to a bunch of events, did our summer intensive and took advantage of all the resources we had. But what directly got him customers and paying users was when we connected him with some founders who were in Y Combinator. They heard his story and said, “We think you’re legit. You can help us with some things development-wise, and we have a bunch of people with companies in Y Combinator we can set you up with.” He got paying customers like that.
That was after all the mentors we connected him with, who gave him great advice but weren’t able to make that last-mile connection to make the real-world thing happen.
Edgar, I was talking with Sol Lipman yesterday, and his idea of a mentor was somebody who makes connections, not somebody who teaches you how to do stuff. In your world, do you have any mentors at all, or is it all advisors?
Edgar: It’s all advisors.
What would you do if someone said, “I want to be a mentor”? Send them to an incubator?
Edgar: Unfortunately, I would tell them we’re not the place for them. As much as I would want mentors as well as advisors in our organization, the model’s not there, because it’s government funding and we have to be delicate about how we bring people on board.
One differentiator people should know: as long as you’re in business, you always have your advisor available. Two or three years from now your business may change, it may pivot, and you can still count on your SBDC advisors to be there. We’re always going to be with you when you need us.
And becoming an advisor isn’t easy. They have to be an expert in some area.
Edgar: A lot of our advisors are consultants in their own right, or investors, or have had successful exits. We focus on people who’ve done it before, who may not be retired but are almost there. We want their networks to still be fresh, especially here in Silicon Valley. You retire, and three months later your connections probably run dry.
Do your advisors connect people to other people?
Edgar: Sometimes. What I tell clients is: if you foster that relationship, it can go beyond just advising. I’ve seen people work with their advisor for two or three years and then bring them on board as an employee, or as a private investor. But it’s on you how you want that relationship to work. You could see us as just transactional — I’ll come to you when I need you. Or you could really build that relationship, and then the advisor starts to open up their networks: “Oh yes, this person has potential. They’re coachable. They’re a great entrepreneur. Let me connect them.”
When I came to the SBDC as a small business myself, you made sure I knew there was no conflict of interest — that I couldn’t hire my advisor to do work for me. Founders and young people are often taken advantage of, and the SBDC is a safe place.
Edgar: Exactly. Especially in Silicon Valley — they’re called sharks for a reason. A lot of people will promise you something — connections, mentoring, being your advisor — but for a percentage of your company, or a fee you may not be in a position to afford. That’s where the SBDC comes in. It’s all free, no cost.
The advisors are there to work for you. They’re not supposed to solicit their business to you. If the entrepreneur decides, “I see a lot of value in this person joining my team,” they contact me and say they’d like to hire that advisor, or bring them on as a consultant. And then we separate that connection.
“Draw the line somewhere”
Eli, on your side it’s all volunteer mentors. Why is that?
Eli: We don’t have money to pay people. We couldn’t afford the mentors’ rates. So we rely on them being a good person, connected to San Jose State in some way or just a helpful community member, who says, “Students need help, so I want to help them.” They offer services that can be worth hundreds of dollars an hour, for free.
We have a mentor code of conduct that people agree to when they sign up. But we also work with the students, so they know what a healthy mentor relationship looks like. For a lot of them, it’s their first professional meeting with somebody who’s an expert in a field. So we talk with them heavily beforehand. You don’t want to come and just say, “Hi, I need help.” You want specific questions and challenges. Really have your details ready.
And the general things. You’re not always going to be right either. You want to get opinions from a handful of people. And you want to have your line somewhere, where it’s like, “No, actually, this is my business, and I want to do it this way.” So take all the feedback in, but draw the line somewhere. Working with them beforehand and during has really helped with that.
That reminds me of the Venture Mentoring Team, who introduced me to team mentoring. In my own career, I got advice from one person that turned out not to be great, and it affected years of my life. So the VMT has a policy of at least two mentors in the room every time, and up to five or six.
Eli: I forgot to mention this — we have a connection with the VMT that we use to help our startups, including that group mentorship: feedback from five, six, seven people at once on a pitch. We had them judge some of our summer intensive teams on the first day, so it was the worst pitch they were going to give. And we saw mentors disagreeing — not in a bad way. They’re talking to each other: “Oh, maybe that does make sense.” It’s super cool to see.
Success stories
Edgar, what are some success stories? When people come to the SBDC, do they need a product, customers, traction, revenue? Where do they start, and where have people ended up?
Edgar: Because we’re government-funded and free, honestly, you just need an idea for a business. We help you formalize it, create business plans, refine a business model and get started. If your parents are retiring and want to give the business to you, you can come to us. If you’re established and want to franchise or scale, you can come to us. I believe the SBA rule is that anything under 250 employees is a small business, so if you’re under that, you can use our services.
So what are some stories of people going from zero to one to 10, maybe to 250 employees?
Edgar: When I was managing a similar organization called Tech Futures Group, we helped researchers out of Sandia National Lab. They were doing microfluidic technology in the male fertility sector. We helped them with SBIR grants, phase one and phase two, and we helped them get private investment, and now they’re selling nationwide, in Walgreens and whatnot.
We saw different iterations of that business, and different CEOs. They had a good relationship with their advisor, and five years later they came back and said, “Can you help me hire a new CEO?” — because the original person was stepping away. That entrepreneur did it right. They used specialty advisors, fostered that relationship, and kept us around through the trajectory of their business.
And there have been small ones. During the pandemic, local cities issued grants, and we helped facilitate those to the businesses who needed them. We helped one individual with $5,000 just to open the door to their business. I consider all of those successes. As long as we’re doing right by the entrepreneur and doing right by the community, it’s always a success.
Even the small ones make an economic impact. And I’ll admit it: I have advisors at the SBDC myself. My SaaS company was growing, and I was tired of managing freelancers and 1099s. You put me together with an advisor named Ann, who walked me through the steps. I hired my first employee in January and another in June, both part-timers, and they helped the company grow.
Eli, the incubator is there to help founders launch companies, but also to help people develop entrepreneurial thinking. Edgar might measure things by economic impact. How do you measure success in an incubator?
Eli: There are a few avenues, and the first one that comes to mind is still the business side. We’ve been around for three-ish years, and one of our founders, Angel, had an exit. That was a huge milestone: the first company that started through here, became a real business with a handful of people working on it, and got acquired by another company in a very similar field that was developing the same technology.
I remember that. What did the incubator do to help Angel along her journey, so that later she had something valuable enough that another company wanted to buy it?
Eli: I think this is a common theme: Angel used almost everything. She signed up for programs that gave a little bit of funding for server costs and things like that, and for mentorship, with mentors from across the board.
But one of the coolest ways she took advantage was by using the incubator to invite people she wanted to meet to get involved at San Jose State. We had a founder speaker event, and she came to us and said, “There’s this Y Combinator founder I really want to meet, but I don’t have a specific ask right now. Can we invite them to the speaker panel?” We said, “Go for it.” He was super enthusiastic, came to the event and had a great time. She said that was the start of a really good relationship with a fellow founder. So not only did she use the things we had, she made new opportunities.
“Sometimes you’re not ready”
Every founder comes in saying, “I need money, I need money.” How do you handle that in the incubator? And if they actually do need money, what can you do to help?
Eli: That is pretty much the first question everybody asks — “I want money” — which is understandable, and money is always helpful. If somebody genuinely does need money, and is at the position where money would solve a problem they’re experiencing and have defined, we have some programs that grant capital, a very small amount. But we also have access to a really good network of competitions. There’s something happening all the time, a competition or a hackathon, where you can win somewhere between $500 and $2,000 or $3,000 to take home, and it’s completely non-dilutive.
One of our startups, Concussion Coach, was able to win $40,000-plus just by signing up for literally every competition that was available. No matter whether it was $500 or $40,000, they were there. They saved up enough to actually start paying an engineer full-time to develop the product, and to pay for prototypes and materials to get it going.
And the incubator’s role was just showing them which competitions to go to, or did you actually help them?
Eli: At the very start, it was competitions we hosted ourselves, for smaller amounts. And in this very room, I’d sit on Zoom calls with them on that screen over there, along with someone who would make them do their pitch and then say, “That was terrible, do it again.” Once they’d done a lot of work on their pitch, we took them to things like the Cal State–wide launch competition. It’s a two-way conversation: we pick them, but they also have to be willing to put in the work. And that paid off for them.
Edgar, you mentioned SBIRs and government grants, and I don’t think a lot of people know what those are. When founders come to the SBDC, you don’t tell them you’ll get them a venture capitalist. There’s a different route to money?
Edgar: Just to clarify: we do not give money. What I mentioned during the pandemic was a special case, where cities came to the SBDC to help facilitate funds they were giving businesses. But usually we do not give money. We’re just an advisory service.
SBIR, for those who don’t know, stands for Small Business Innovation Research — grants that the US government provides to the private sector. Every three-letter agency throws money into this bucket. For example, the Department of Energy may have a problem it’s looking for a private-sector solution to. You may have a technology or an idea that says, “I can solve that,” and then you go through the grant application process.
There are two phases. Phase one is $250,000, usually for research and development. Phase two is your commercialization money, which is $1.5 million. All that money is non-dilutive. In California, if you’re a solo entrepreneur going after SBIR funding, you have a 15% hit rate. With our help, it’s 50%.
The reason is we tell you sometimes you’re not ready. You think you’re ready; you may not be ready. We say, “Look, go do X, Y and Z first, then come back.” Or sometimes your application may not be up to the standards of that agency, so we’ll say, “Fix the margins on your application, you’re using the wrong font, more pictures,” this and that. That prepares you for success.
“The reason is we tell you sometimes you’re not ready.”
— Edgar Ceron · Inspiring Founders Podcast, Ep. 02
So the role of a really good advisor isn’t always to say, “This is so good, you’re so amazing, keep going.” It’s to say, “If you really want to be successful, you need to do some work. You need to change this, that or the other.”
Edgar: Exactly. Every entrepreneur wants funding, but not all entrepreneurs are ready for it. Every institution — a bank, a grant program, even investors — has its own standard for when it can start considering you. We’ll prepare you to be that high-potential client.
Eli, you’re at a university and you don’t have an investment fund here. Are there investors in the community who are interested in the startups coming through the incubator — angels you can put founders in front of?
Eli: We’re lucky to be in a location with a lot of people interested in angel investing in really early-stage startups. What we’ve found is that people are often not ready for that. But once they are ready, it happens really easily. The feedback we’ve gotten is almost, “That was actually weird, that they wanted to give us money.”
The few startups we’ve had that were invested in, or got into programs like Y Combinator, had one thing they were able to sit on and say, “This is why you should give us money” — whether it’s traction, or some innovative solution nobody else has the ability to do. But when you’re at the earlier stage and you don’t have something like that yet, you’re in a really bad position to look for money.
So early-stage founders come to the table with an idea they think is great, some innovation they’ve created, or traction that shows customers want to buy. Most come in at the idea stage — and that’s the hardest place to get money, because anyone can come up with an idea. The innovation and the traction are critical.
Eli: The most common question — or the way you can think about it — is: why me, and why now? If you can’t answer those, having a good idea isn’t necessarily answering either of them.
“Advisors give more actionable advice”
Tessa, an investor joining on Zoom: What’s the difference between an advisor and a mentor?
Eli: From my perspective, an advisor gives you very actionable advice — do this, or this needs to be done. Sometimes it’s not even subjective, it’s a fact: you have to fill out this legal form to sell in California. A mentor comes in kind of early, looks at the overview, tells you what looks good and what you should think about more. It’s very high-level, and they’re there to be along for the ride, on a more personal level.
Edgar: I completely agree. That’s why I say we’re advisors, not mentors or consultants. An advisor has been through it. They filled out those same forms you need to fill out. They know the path you need to take. Like Eli said, the mentor sees where you’re trying to get to — it’s a slow process — and they make that more personal connection. But advisors give more actionable advice.
More conversations with founders on the Inspiring Founders Podcast.