I’m so busy just trying to get my startup off the ground that I’m wondering if it’s really worth the time and effort to set up a Board of Advisors. That’s a huge investment in time that I have to make, plus legal fees. Any guidance would be appreciated.
I’m coming at this question from a particular perspective– that of an Advisor to four startups– but my answer is that it’s absolutely worth it, IF you can find the time and be disciplined in actually using your Advisory Board.
Building an Advisory Board can be a fairly cheap way of gaining access to talent, experience and rolodexes without having to actually hire people. In most cases, advisors will participate for 0.25% – 0.75% each, meaning you can build a solid group of 4-5 folks who will contribute for a couple years for just a point or two of total company equity. For most early stage startups, that’s a tremendous bang for the (equity) buck.
Now back to my caveat above– it’s only worth it if you can find the time to actively use your Board. My advice here is to keep it straightforward and exceedingly simple. I suggest having a set, standing meeting– say, once every other month or once a quarter– where you review progress made during the previous period, set new ‘reach’ goals, and brainstorm solutions to problems. In this way, you get into a rhythm with your Board, and you get the most value out of them.
Of course, you should feel free to lean on your advisors to help solve problems or make introductions at other times, too- particularly during a deal phase, such as a fundraising or acquisition. But don’t abuse the privilege (remember, these are “advisors” not employees, so while most will freely open their network, they will stop short of doing the heavy lifting of putting together an investor roadshow, for example).
If you’d like to read a long and rambling essay on Advisory Boards, I wrote a blog post on it awhile ago, found here: http://bit.ly/aTyknB Cheers, Nathan Beckord, VentureArchetypes