Hi all, my startup has finally reached to a point where we need to start looking for external advisors but wondering where to start. How do you normally approach this process and what type of equity or other returns do you offer? Any tips will be highly appreciated. Thanks!
That's an amazing stage to be at. You've done well and now you can shine!
Advisors have to love your project as much as you do, but also give doses of reality when needed. You want someone who isn't too passive but also someone who can give you a kick in the tail when you need it.
In regards to compensation, it really depends on what they are bringing to the table: Wisdom, connections, investors, etc. all have differing value sets and the more you cut into the pie, the less you will have to give later. I'd start with your team deciding how much you are allocating for future investors, founders shares, and for advisors I usually have seen 10% of the total pie allocated to be divided between your core advisor panel.
Last bit of advice, don't just go for a profile, go for passion and an advisor who can contribute. There's a lot of companies that have rock star advisors, but high profile doesn't mean it'll be best for your company.
Hope that helps!
Hi Ivana. A good advisory board can be a big help. This book provides some good insights on professional advisory boards - https://smile.amazon.com/Game-Changing-Advisory-Boards-Leveraging-Sustainable-ebook/dp/B00CJH8DGK/ref=sr_1_1?ie=UTF8&qid=1547217370&sr=8-1&keywords=advisory+board
Find someone who can value add and has expertise and contacts in your business. You can start an advisory board and allocate some options in the Company to advisors. Options should have a vesting schedule.
Hey Ivana - if an advisor does not believe in your business enough to invest in it, they probably wont me great advisors... The top companies out there do not pay their advisors (unless they are board members).
E.g. We have internal Advisor and she is paid in equity shares.
So do not need external advisors, at least for now
Glad to know about your startup!
Always look-out for advisers who have exposure to work with startups and offers value added services under one umbrella. This will decrease the time consumed and cost while also helping you in right decision making. Always keep in mind, fund raise is not a problem but solution and how to make best out of it is a big hiccup face by startups these days as they cant afford a full time CFO to take care of it, where our role comes in to manage your business as well as financial that works simultaneously. To know more about us kindly visit www.quantsadvisory.com or write to us firstname.lastname@example.org
Don't see your company as a owner but an investor!