How To Build a Startup Advisory Board

Want to supercharge your startup's growth? Build an advisory board. Here's how:

1. Find the right advisors:
   • Look for domain experts
   • Seek problem-solvers
   • Ensure cultural fit
   • Aim for diverse skills
2. Set up contracts:
   • Offer equity (0.25% to 1%)
   • Use clear agreements
3. Run effective meetings:
   • Meet quarterly
   • Focus on 2-3 key issues
   • Send materials in advance
4. Track advisor input:
   • Use a simple progress tracker
   • Follow up on advice given
5. Keep communication open:
   • Send monthly updates
   • Make quick calls when needed

Remember: A good advisory board fills your knowledge gaps, opens doors, and helps you avoid costly mistakes. It's your secret weapon for startup success.

Pro tip: Be open to feedback and ready to act on advice. That's how you'll get the most value from your advisory dream team.

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Advisory Board Basics

Need a crew of seasoned pros to help navigate your startup? That's where an advisory board comes in. Let's break down what these boards do and when to bring one on board.

What Is an Advisory Board?

Think of an advisory board as your startup's dream team of industry experts. They're there to share their smarts, but without the legal strings attached. Unlike a board of directors (with all their fiduciary duties and voting rights), an advisory board is more like your personal brain trust.

Here's the scoop:

• They give you informal guidance and strategic insights, without getting bogged down in day-to-day stuff.
• It's usually 4-6 senior execs who bring specialized knowledge to the table.
• No legal ties here - advisors don't carry financial liability to your company or shareholders.

Marissa Levin, a board expert, puts it this way:

"There are quite a few differences between a board of directors and an advisory board, but the major difference lies in fiduciary responsibilities."

Your advisory board is like a secret weapon. They can help you fill knowledge gaps, break into new markets, and supercharge your growth. It's the edge that can put your startup ahead of the pack.

When to Form Your Board

In the startup world, timing is key. The same goes for setting up your advisory board. Here's when to make your move:

• Early Stages: Get one going ASAP, especially if you need specific expertise or connections to get off the ground.
• Growth Phase: Bring in advisors when you're ready to scale up or enter new markets.
• Facing Challenges: Put together a board when you hit roadblocks that need an outside perspective.

Clint Korver, Partner at Ulu Ventures, doesn't mince words:

"The most common mistake startups make is not having a board at all."

When you're ready to form your board, look for people who can:

• Give you the inside scoop on industry trends
• Really get the competitive landscape
• Hook you up with potential partners or customers
• Fill in the gaps in your team's knowledge and experience

Finding the Right Advisors

Picking the perfect mix of mentors for your startup is key. Let's explore how to select advisors who'll boost your venture's growth.

What to Look For in Advisors

When hunting for advisors, focus on these qualities:

Domain Expertise: Find experts in areas crucial for your next 12-18 months. If you're launching a fintech app, you might want someone who knows financial regulations inside out.

Problem-Solving Skills: Top advisors ask tough questions. Erica Dhawan of Erica Dhawan, LLC says:

"The best advisors don't just tell you the answer. They know that they don't know the answer, and the best way to help is to ask powerful questions that get a mentee to think differently and question his own assumptions."

Cultural Fit: Your advisors should mesh with your startup's vibe. Shradha Agarwal from ContextMedia notes:

"Culture fit sounds like something that is talked about frequently during employee hiring, but not during board-building processes."

Passion Beyond Profit: Look for advisors who genuinely care about your mission, not just the potential payout.

Strong Communication: Seek people who can explain complex ideas simply. They'll be your go-to for bouncing ideas and possibly your startup's champions.

Building a Mixed Skill Set

A diverse advisory board is crucial. Here's why:

Your board should have a mix of skills. If you're a tech whiz but struggle with marketing, find a marketing expert to balance things out. Include advisors from different industries for fresh perspectives. Bring in people who've scaled businesses before - they've been there, done that. And don't forget about connections - advisors with diverse networks can open doors for you.

Robby Hill from HillSouth shares his strategy:

"I stacked my advisory board with a cross-section of people: doctors, vice presidents, managers, retirees and average Joes. I also went with customers and non-customers who were people I respected and wanted advice from."

Advisor Evaluation Checklist

Rate potential advisors using this checklist:

It's not just about impressive resumes. Alan Cohen, Chief Commercial Officer of Illumio, suggests:

"Advisors should have (financial) skin in the game. You want them to think like an owner – like a founder – and not like someone who has some free shares in the company."

Setting Up Advisor Contracts

Found the perfect advisors for your startup? Time to make it official. A solid advisor agreement sets clear expectations and protects everyone involved. Let's break down the key parts of these important contracts.

How to Pay Advisors

Paying advisors can be tricky, especially when you're tight on cash. But don't worry - you've got options.

Most advisors get that early-stage companies are strapped for cash. They're often cool with equity compensation. Usually, advisors get between 0.25% and 1% of the company's equity. It depends on how involved they are and what stage your startup's at.

Take Airbnb, for example. When they were just starting out, they gave their early advisors 0.1% to 0.25% in equity. That small slice turned into big bucks when Airbnb went public in 2020.

But equity isn't the only way to go. Here are some other options:

• Cash: Got funding? A set amount or hourly rate might work.
• Equity: Usually stock options or restricted stock units (RSUs).
• Mix it up: Some cash, some equity. Best of both worlds.

The key? Match the pay to the value they bring. As Clint Korver from Ulu Ventures puts it:

"The most effective advisor relationships are those where the advisor has skin in the game. They should be invested in your success, quite literally."

What Goes in an Advisor Agreement

A good advisor agreement is like a roadmap for your partnership. Here's what you need to include:

Pro tip: Start with a template like the Founder / Advisor Standard Template (FAST). But always get a lawyer to look it over and make it fit your specific needs.

When you're writing this up, be super clear about what you expect. One startup founder learned this the hard way:

"I once had an advisor who promised to help us boost revenue by 300%. We gave them equity upfront, only to realize later that we should have tied it to actual results. Now, I always make sure advisor equity is performance-based."

Clear expectations and smart contracts can set you up for advisor relationships that really pay off. Get it right, and you'll have a powerhouse team helping your startup soar.

Running Board Meetings

Advisory board meetings are your chance to tap into your dream team's wisdom. But without good planning, these sessions can become time-wasters. Here's how to run them like a pro.

Meeting Plans and Timing

How often should you gather your advisory board? Aim for quarterly meetings. This keeps advisors engaged without overwhelming them. After all, they're juggling other commitments too.

Jeff Erickson, a founder and startup advisor, says:

"It's important to recognize that your company is not their full-time job and not always top of mind for them."

So, make each meeting count. Here's a structure that works:

• Duration: 4-6 hours. Enough time to dig deep without dragging on.
• Flow: Start with updates, then move to creative discussions. Spend about 45 minutes on strategic talks.
• Focus: Pick 2-3 critical issues for input. Keep discussions targeted.
• Prep: Send materials two weeks before. Give advisors time to review.

Pro tip: Use tech to your advantage. Online polls or anonymous feedback tools can gather real-time input and ensure all voices are heard.

Meeting Agenda Template

A good agenda is your roadmap. Here's a template to start with:

Tailor this to your needs and board dynamics.

When running the meeting:

1. Set the stage: Start with a quick icebreaker. It builds trust in diverse groups. Amy Ravi, CEO of ExtendMed, says:

"There's a lot of nuance to building psychological trust with a diverse group of people. It's easy to feel intimidated if you've suddenly been put into a group with an internationally renowned physician. The goal is to make everyone feel equal. Everyone's contribution matters just the same."

2. Encourage participation: Use the "popcorn" strategy for group discussions. It keeps energy high and everyone contributing.

3. Mind the clock: Use a timer to keep discussions on track. It's a neutral way to manage time.

4. Capture insights: Assign a note-taker for key points and action items.

5. Follow up: Send out a summary after the meeting. It keeps everyone aligned and accountable.

Working with Your Advisors

Building a great advisory board is just the start. The real value comes from nurturing these relationships and tapping into your advisors' expertise. Here's how to get the most out of your dream team:

Tracking Advisor Input

You need a system to keep your advisors engaged and measure their impact. Here's how:

Be clear about what you need: From the get-go, tell each advisor exactly what you're looking for. Phin Barnes, Partner at First Round, says:

"It's very easy as an advisor or an investor... to just show up, spend three hours getting an update, say, 'keep it up see you next month,' and leave."

Don't let this happen. Tell them exactly what kind of help you need.

Focus your meetings: When you reach out, have a clear goal. Are you making a decision? Brainstorming? Talking strategy? Knowing this helps advisors come prepared and contribute effectively.

Always follow up: After each chat, send a quick summary of the main points and next steps. It shows you value their input and keeps everyone on the same page.

Track results: Keep tabs on how advisor suggestions play out in the real world. Did their intro lead to a key partnership? Did their product feedback boost user engagement? Put numbers to these wins.

Advisor Progress Tracker

Use this simple tool to keep an eye on advisor contributions:

This tracker helps you see each advisor's involvement and impact at a glance. Check it often to make sure you're using your board effectively.

Pro tip: Share a version of this tracker with your advisors. It keeps them motivated and shows you're serious about using their advice.

Remember, advisor relationships go both ways. Johannes Radig, Startup Advisor for 500 Global, says:

"It can be frustrating when founders and entrepreneurs ignore advice and go back to their old ways very quickly. If they aren't brutally honest about their situation and challenges, it can be difficult to advise them."

Be open about your challenges and ready to hear feedback. It's the only way to really benefit from your advisors' know-how.

Keep talking: Don't wait for formal meetings to chat with your advisors. Bob Arciniaga, Founder of Advisory Board Architects, says:

"The primary purpose of an advisory board should be to drive outcomes."

To make this happen, stay in touch regularly:

• Send monthly emails about key metrics and milestones
• Set up quick calls for urgent issues
• Invite advisors to company events

Conclusion

Building a startup advisory board can supercharge your company's growth. It's like creating a brain trust to guide you through tough spots and help you grab opportunities.

Here's how to build and run an effective advisory board:

Pick the right people: Choose advisors who fill in your team's skill gaps. Focus on experts in areas crucial for your next year or so of growth. Clint Korver from Ulu Ventures puts it well:

"The most effective advisor relationships are those where the advisor has skin in the game. They should be invested in your success, quite literally."

Be clear from the start: Spell out roles, responsibilities, and pay. Use a solid advisor agreement to avoid confusion later.

Keep in touch: Don't just stick to quarterly meetings. Send monthly updates, make quick calls when needed, and invite advisors to company events. This keeps their expertise flowing.

Check their impact: Use a simple system to track what advisors contribute and how it affects your business. It shows their value and keeps them on their toes.

Listen up: Your advisors are there to give honest, sometimes tough, feedback. Make sure they feel they can speak their minds.

Switch it up: As your startup grows, your advisory needs might change. Keep an eye on whether your current advisors are still helping, and don't be afraid to make changes.

Use these tips, and you'll set your startup up for success. A well-run advisory board can be the secret sauce that helps your company thrive in the cutthroat startup world.

Jeff Erickson, a seasoned founder and startup advisor, reminds us:

"It's important to recognize that your company is not their full-time job and not always top of mind for them."

So make every interaction count. With the right approach, your advisory board can become your secret weapon, giving you the insights, connections, and guidance you need to build a killer startup.

FAQs

How to find an advisor for startup?

Finding a startup advisor isn't rocket science. Here's how to do it:

1. Hit up networking events

Go to meetups, demo days, and conferences. You'll bump into pros who might want to advise startups.

2. Send some cold emails

Don't be shy. Reach out to people you look up to in your industry. Keep it short, tell them why you want their advice, and how it fits with what your startup needs.

3. Try mentorship platforms

Use sites made to match founders with mentors. GrowthMentor, for example, has hooked up thousands of startups with advisors across different industries.

4. Join an accelerator

Many accelerators, like Y Combinator or Techstars, give you access to a bunch of mentors and advisors as part of their programs.

When you're reaching out to potential advisors, focus on making a real connection. As Matt Munson, a startup advisor, puts it:

"Engage prospective advisors by inviting them into your story and building a genuine connection before formalizing the advisory relationship."

What does an advisor do for a startup?

A good startup advisor is like a Swiss Army knife. They do a bit of everything:

• Give you strategic advice
• Help you dodge common mistakes
• Introduce you to investors, partners, or potential hires
• Share their expert knowledge
• Act as a sounding board for your ideas

James Griffin Cole, who's been around the block as a startup mentor, says:

"A startup advisor is a person you can develop a strong business relationship with. They can help structure your company, navigate startup pitfalls, secure financing, build equity, and grow your business to its maximum potential."

What is the role of the advisory board in a startup?

Think of an advisory board as your startup's brain trust. It's a group of experienced folks who give non-binding strategic advice to your management team. They:

• Bring different viewpoints to the table
• Make your startup look good (if they're well-known in the industry)
• Keep you on track with your goals

Hostfully's CEO, Schmorak, is a fan:

"It has helped us move faster."

When you're putting together your advisory board, mix it up. Look for people with skills that fill in your team's gaps and address your startup's specific needs. The goal? Create a group that can give you strategic insights and help your company grow faster.