Seven Steps to Creating a World-Class Advisory Board
By Craig K. Collins
- Integrity Counts. When approaching potential Advisors, integrity is everything. Be upfront and transparent in your communications. Don’t be afraid to let them know your challenges. Tell them how you think they can help. Failure to begin with this approach could scare away potential Advisors. These are high-profile people. They’re willing to take risks, but only if they sense that you’re an honest, straightforward person.
- Build a Two-Way Street. There’s an unspoken quid pro quo that Advisors will expect. They will provide you with time, wisdom, creativity, contacts and industry expertise. In exchange, they’ll expect to be showered with a little recognition and publicity. Be sure to send out press releases on all your Advisors. List them on your website. Keep in mind that these types of people are master networkers. They will be drawn to The Next Big Thing. They will want to contribute to your success and bask in its glow. Let them. It’s one of the allures of joining an early-stage Advisory Board. Use that to your advantage.
- Draft a Diverse Roster. There’s a reason football teams don’t draft 11 top-tier quarterbacks. Good teams need a full complement of talent. Likewise, you need a range of tools in your toolbox. The worst thing you can do with an Advisory Board is fill a roster with similar, like-minded people. You’ll only succeed in creating an echo chamber. Just like a management team, you’ll need skills and perspectives from finance, technology, the arts, entertainment, medicine and beyond. This is an opportunity to shore up your areas of weakness.
- Make Sure Your Advisors are Invested and Vested. Don’t be crass. It’s impolite to show up to a meeting with a potential Advisor with your hand out. Instead, come bearing gifts. Make sure your Advisors are truly invested in your success. Set up a stock option plan for your Advisory Board. Typically, 0.2% of your equity in the form of options for each Advisor will do the trick. A board term of two years with monthly vesting over 24 months is optimal. Once your Advisors feel like they’re part of the team, they’ll work harder for you. Plus, it will be easier to approach them in a soft-sell manner during fundraising.
- Size Matters. When you’re just starting out, you need to gather between four to six Advisors. Fewer won’t give you enough critical mass coming out of the gate, and more is unwieldy. As your company and your Advisory Board begin to grow and gain momentum, selectively add new members. If you’re top-heavy with technology execs, add a marketing or finance guru. You should end up with an Advisory board of between eight to 16 members.
- Don’t Forget to Have Fun. All work and no play makes for dull Advisors. These people are typically voracious networkers. One reason they’ll join your Advisory Board is the opportunity to mingle with other alpha thought-leaders. Make sure you give them ample opportunity. Hold a wine tasting. Gather them for a half-day strategy session followed by an evening at the ballpark. Bring small groups in for a whiteboard session, and then take them to a nice restaurant.
- Evolve. The Advisors you’ll need at the beginning won’t be the Advisors you’ll need down the road. When you’re out raising a friends-and-family round, you need Advisors who can help vet your first business plan or put you in touch with people who can write checks for $25,000. When you’re in high-growth mode, you’ll need Advisors who can help you recruit C-level talent and tell you whom to approach for a $20 million B round. Add new Advisors with a more seasoned skill set.