So many people talking advisory boards at the moment, so thought i'd share some of the learnings from this week. Including notes from a great session that Ed Kang gave for Startups.com
You can watch it here.
Key takeaways....
Advisor Compensation Levels:
- Consider how much responsibility will they have?
- 0.25 - 2% typical advisor level (2% is really high. Has to be making a BIG contribution / moving the needle).
- Advisor’s relevance can change over time. So just because they are valuable now, doesn’t mean they will be throughout. (Hence need to not overweight in early days).
- Ensure there is a vesting schedule (with a cliff).
Purpose: The board should round you out, especially if you can’t find a cofounder / employee with those skills.
Avoid:
- Crossover between above characteristics. It gets cumbersome.
- Get people to join, who will give you genuine advice / add value (not to make your pitch deck look good / help you raise).
Recruiting Tactics:
- Network, treat it like another other recruiting process
- Build advisor pool slowly.
- Find relevant people to ask their advice from first - approach like business research
- Assess the chemistry.
- Qualify their advice, how valuable is it?
Formalising things:
- Ask them if they’d be open to formalising the agreement
- You can use the “Founder Advisor Standard Template” if its a straight forward arrangement (just make sure to get a lawyer to check it first).
