Advisory Boards ~ An Endangered Species
March 3, 2008
Have you noticed that fewer and fewer companies are recruiting so called ‘Advisory Boards’? Advisory boards are bodies that advises the board of directors and management of a startup but does not have authority to vote on corporate matters. During the boom times, i.e. when everyone is going after readily available venture cash, everyone recruits a star-studded advisory board thinking it might help them get the term sheet and close their funding round. Often the right advisory board members can help. But in the lean times, when you are simply focused on building your company (i.e. not raising money for any number of reasons), the RIGHT advisory board can be a great asset. I know it is a little work, but take some time this quarter and start an advisory board - three members is a perfect size.
Matt is talking about advisory boards on his blog today and has some great suggestions for anyone thinking about building an advisory board:
- Figure out what kind of Advisory Board you want to build — is it one that functions as a group, or is it one that’s a collection of individual advisers, and a Board in name only?
- Clarify the mission, role, and expected time required from advisers on paper, both for yourself and for people you ask.
- Figure out the types of people you want on your Advisory Board up front, as well as a couple candidates for each “slot.” For example, you may want one financial adviser, one industry adviser, one seasoned CEO to act as a mentor or coach, and one technical adviser
- Aim high. Ask the absolute best person you can get introduced to for each slot. People will be flattered to be asked. Many will say yes. The worst they will do is say no and refer you to others who might be similarly helpful (if you ask for it)
- Work your Advisory Board up to the expectation you set for them. Make sure you include them enough in company communications and documents so they are up to speed and can be helpful when you need them. Treat them as much like a Board of Directors as you can
On the other hand, if you are asked to serve on an advisory board Matt has some specific suggestions for you:
- Make sure you are interested in the subject matter of the company, or
- That you have a good reason to want to spend time with the entrepreneur or the other Advisory Board members for other reasons, and
- Don’t be afraid to say no if these conditions aren’t met (it’s your time, no reason to be too altruistic)
- Clarify up front the time commitment
- Try to get some form of compensation for your effort, whether a modest option grant (size totally depends on the time commitment), or the ability to invest in the company
- Be sure to let your employer know. Ask for permission if the business you’re advising is at all related to your company, and get the permission in writing for your HR file
- Follow through on your commitment to the entrepreneur, and resign from the Advisory Board if you can’t
