Whatever it is you’re doing, someone’s done it before. If that sounds like simply comfort for startup founders, it doesn’t have to. The fact that there’s always someone out there who’s gone through similar struggles and experiences in the effort to launch a new business can become a real strategic advantage. Bringing on board the right adviser for your startup isn’t easy, though. If you want somebody to actually help you steer your new venture, rather than just drop a word of wisdom every now and then, try using these five criteria in the recruiting process.
It’s less about what you know than who you know. An adviser with the right connections can open many doors for your company. Let’s say you’re fundraising as a first-time entrepreneur; your network of VCs is likely pretty limited. The right adviser can vouch for you and make warm introductions in the pockets of the VC community that best suit your needs.
Still, be sure to vet your adviser’s connections, and don’t get overexcited by the first person who wants to be your adviser. I’ve heard stories of small startups who brought on advisers with false claims of bringing value to the table, and they never end well. Of course, that may not be the norm, but it highlights the importance of taking the time to get to know your advisers as well as to talk to other founders who have worked with them.
Don’t bring on an adviser just because of their experience. Great experience means nothing if they aren’t willing to roll up their sleeves and work for you.
Any potential hire has a clear role to fill in your company. The same principle applies to advisers. The best advisers are those who understand they’re there not just to dispense advice, but to do meaningful work for the startup. Before bringing them on board, make sure to clarify your expectations, and if they don’t deliver, that the company may need to cut ties.
Some advisers may want to sit back, relax, and answer a couple of emails every few months or so. Especially in the high-wire act of your startup’s early days, that attitude simply won’t cut it. It doesn’t matter how big-name your disengaged adviser might be; you can find someone more useful.
Bringing on a startup adviser is always about an exchange of value. I’ve heard of advisers getting paid a salary, but I personally prefer to deal exclusively in equity, because it fosters a sense of ownership.
In Silicon Valley, I’ve seen plenty of two-year vesting deals for advisers. If you’re early-stage startup, 0.25% to 1% for about five to 10 hours a week makes sense, but bigger deals for more work are worth considering, too. Be wary of advisers trying too hard to negotiate salary or equity. Advisers shouldn’t be in it to get rich; they should be there to help a startup that they believe will succeed in the long run.
Diversity is all about gaining different perspectives. A board full of folks who all think the same won’t innovate or problem-solve in more ways than one. That’s another reason why it’s so crucial to get to know your advisers really well before you bring them on board. Understand their idiosyncrasies and what it is that makes them different. Treat it like you’d treat hiring any employee. The goal is to bring as many relevant experiences and skill sets to the table as you can.
The last person you want on your team is someone who doesn’t care about your company or product. Get advisers to invest their money (if they’re an accredited investor) before throwing in additional advisory shares. But don’t dismiss potential advisers out of hand if they’re unwilling to do so. First try to understand why. There are cases where it makes complete sense for the adviser not to invest (much the way you wouldn’t ask a potential employee to lay their own money on the table), so consider each case on its merits and be discerning.
I’m thankful for all the advisers who ended up fitting into my own startup’s ecosystem. They’ve been invaluable. But choosing them was an arduous process that required weighing many different factors. When it comes to selecting an adviser, though, being choosy can pay off.