There may be safety in numbers, but for many startups, there is also wisdom in numbers, complementary talents and skill sets in numbers, and credibility in numbers. Having a number of people with the experience and insight to help your early stage company navigate challenges, avoid mistakes, and build a foundation for future success can be a huge asset. That’s the kind of guidance that can come from establishing a well-credentialed and committed advisory board.
An advisory board is many things: a group of mentors, a sounding board, a foot in the door to important and useful connections, and a signal to potential investors that you have some street cred. It is not, however, a board of directors; an advisory board has no authority over company decisions or fiduciary responsibilities to investors. Members of a start-up’s advisory board are often not compensated beyond the occasional lunch or coffee, though some may want equity in your company in exchange for their participation.
If you decide to assemble an advisory board for your startup, here are five tips for putting together an A-Team:
Fill your Skill Gaps
Entrepreneurs should look at the skill sets and experience of their company’s leadership and determine what they’re missing. Your brilliance may lay in product design, but you may have zero marketing experience. You can work a room like a pro but can’t manage cash flow to save your life. Look to populate your advisory board with people who can fill in the blanks of your existing talent so you have guidance at the ready.
Look for members who will bolster your connections and credibility
You want to be comfortable and compatible with everyone on your advisory board; there’s no point in having an advisor who you are reluctant to ask for advice. But an advisory board can also serve to give your company some gravitas if it is composed in whole or in part with recognized leaders in your industry. Not only can such individuals have useful connections, they may also serve to enhance your credibility when seeking funding.
Know what each advisory member will cost you
As noted, some potential advisory board members may be content with free food and recognition. Others may want to be compensated either in cash or equity in your company. Know what you are prepared to offer your advisory board members, what you expect in return, and prepare a contract reflecting the terms of the relationship.
Cast a wide net
You may already know people who would be a perfect fit for your advisory board; perhaps friends, family, or colleagues who are already mentoring you or giving you advice without a formal title. But look beyond your circle for talent; do some research on LinkedIn and elsewhere to find folks who may be a good fit and see if you have any mutual connections. Don’t be afraid to reach out to introduce yourself and gauge interest, but remember: be prepared, polite, and polished. Know who you are writing or speaking to before contacting them, be solicitous when inquiring about the possibility of coming on board, and have your elevator pitch down cold.
Only hook a few
Most advisory boards have three to five members. Much more than that that and it may become unwieldly. Remember, not all advisory board members will help you for free.
Just as seasoned accounting and legal talent are essential components of a successful start-up, an experienced and committed advisory board can further add to your collective intellectual resources and help position your company for growth.