Every successful startup is nurtured by a great community. That community includes the management team, the board of directors, and advisors. Smart founders want the support of high-profile advisors who can offer PR, connections, capital, and clout. However, the process of choosing the right advisor requires a strategic look at a mix of factors.
I’m fortunate to work with great founders who clearly knew what they needed from me and how our relationship would work. Perhaps more importantly, those founders took the time to do their homework on me and understand what I could bring to the table. Our conversations were productive as a result.
But I’ve also been approached by startups in verticals that are completely out of my area of expertise. On top of that, their verticals were those I had no interest in learning about. In these cases, I try to offer constructive feedback as best I can and make a targeted introduction if I feel the startup is at the right place for it.
With team building being such a time-consuming undertaking, I recommend a more thoughtful approach to finding advisors. Take time to ask these questions:
The complexity of successfully launching a startup calls for a set of advisors who can assist with making things happen. Whether it’s a targeted introduction or advice on user acquisition, be sure you know exactly what you need from the advisor you’re targeting. You may find that the advisor is not right for your company after all or maybe you need to hold off on bringing them on board.
Startups frequently target advisors who are popular or successful in a particular area. While this is usually an indication that an advisor has something to offer, it’s important to do your research before reaching out. Investor Mark Suster discusses this in a blog post of his where he notes the unfortunate things that happen when an investor (or advisor) doesn’t really understand the business, its landscape, or its fundamental challenges. Be sure that your prospective advisor cares about both the industry you’re in and the specific problem you’re attempting to solve.
A good advisor is like a good investor—they’ll ask tough questions before diving in. Take time to think through every aspect of your business and be prepared for the tough questions. In many cases, the advisors' questions come from a place of wanting to be ethical about accepting equity rather than wanting to scare you away.
Nothing spoils an otherwise good partnership faster than misaligned expectations. From the beginning, you should be clear with the prospective advisor about what you want them to do and what you intend to get from them. Be sure to ask them what they hope to gain as well. While many advisors join startups because they genuinely want to help, many also have ulterior motives. The more intelligent questions you ask to assess this, the easier time you’ll have down the road.
Most advisors receive equity in exchange for their participation. However, in cases where the time commitment extends beyond that of a traditional advisor, they sometimes receive cash compensation or a retainer. Be sure to ask how they expect to be compensated and agree on terms before you engage an attorney or begin completing an agreement. Also, remember that there are intangible ways to compensate an advisor as well. In addition to equity or cash, think about ways you can make them more effective and enhance their experience working with you.
—Lisa Nicole Bell is equal parts artist, businesswoman, and motivator. Lisa is the Founder and CEO of Inspired Life Media Group where she and her team meld art, social change, and commerce to create economically viable media properties.
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world's most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
[Image: Flickr user Derek Bridges]