A startup advisory board includes trusted individuals that provides expert guidance and direction to executive leadership. Here's how to form one.
There comes a time when every startup requires outside counsel for something that goes beyond the expertise of their management team.
Whether it be how to raise additional startup capital, deal with a regulatory issue, or gain industry connections, having a well-constructed startup advisory board helps ensure your startup has the resources it needs to be successful.
But how exactly do you form an advisory board for your startup? Read on for information on forming an advisory board and how OnBoard’s full features and capabilities power effective advisory boards.
What is a Startup Advisory Board?
A startup advisory board refers to a collection of subject matter experts that offers insights and guidance to startup management and leadership teams to help them move faster, make better decisions, and improve outcomes. Unlike the board of directors, an advisory board doesn’t have fiduciary duties.
Examples of how an advisory board can help a startup include:
- Advising on positioning and business model strategy
- Helping identify and recruit talent
- Helping create an appropriate startup term sheet
- Introducing you to potential investors and key customers
- Acting as a sounding board for people and organizational issues
- Helping secure startup business loans
- Helping choose the right startup incubator
Even though advisory board members play a significant part in the running of a company, it is uncommon for those companies to require advisory boards to assign their intellectual property rights to them.
Advantages of a Startup Advisory Board
A well-constructed advisory board benefits a startup in several ways, including:
- Provides industry skills, expertise, and knowledge: An advisory board can offer skills, experience, and insights into the areas of expertise a startup lacks within its core team.
- Enhances credibility and authority: When you have industry experts on your advisory board, you enhance the authority and credibility of the startup.
- Increases customer and investor confidence: Having high-profile individuals on an advisory board can help increase customer and investor confidence in a business. Customers will expect quality goods and services, and investors will know the business is receiving advice and insights from subject matter experts.
Steps to Form a Startup Advisory Board
Build a startup advisory board with the following steps.
1. Assess Business Goals and Objectives
Each advisory board should be as unique as the startup it is formed to serve. Ask yourself what areas you lack most in terms of expertise and knowledge. For instance, if you are finding it difficult to attract potential investors, seek advisors who are knowledgeable in that area or with deep industry connections.
Conduct a SWOT (strengths, weaknesses, opportunities, and threats) analysis to help identify what your organization needs. You could also break down your company’s vision and mission into achievable objectives to see where you are still lacking. Also, don’t forget to consider your future goals.
Factoring in business goals and objectives helps an organization choose advisors who can fill gaps in their team’s knowledge and help their business thrive.
2. Utilize Personal Network
When searching for advisors, start with your personal network. Determine whether you have any relationships in your personal network who could add value to your business. For instance, a mentor could sometimes morph into an advisor if they’ve proven valuable and you’ve established a healthy relationship with them. Also, ask your network for their suggestions.
Beyond personal relationships, meeting with potential investors can also be an excellent way of securing advisors. Ask the investors to refer you to people who could accelerate your business’s growth. You could also meet VCs and ask them to refer you to advisors—VCs usually have a network of professionals who are available for portfolio companies.
3. Hire a Diverse Advisory Group
When seeking advisors, ensure you focus on experts from various subject matters and backgrounds to get the most from your board. This ensures your board considers challenges from a number of angles.
Vet potential advisors as you would any employee. Vet the value they can offer by conducting interviews, checking for conflicts of interest, and verifying they fit your startup’s team and culture.
Once you’ve selected your advisors, you need to draft a detailed advisory agreement to set guidelines and expectations.
4. Leverage Board Meeting Technology
The primary purpose of an advisory board is to drive positive outcomes. One way of ensuring they achieve this feat is by providing them with board meeting technology.
A board meeting platform offers an end-user cloud-based communication tool that board members use to conduct, participate in, and coordinate board meetings. This technology can ensure effective startup board meetings by streamlining communication between board members. It will also ensure effective collaboration between your advisory board and your management team by ensuring effective communication and eliminating friction.
OnBoard Powers Effective Advisory Boards
An advisory board is important to the success of a startup. The members of the board can fill any skills and knowledge gaps and provide insights for overcoming challenges and growing a company.
To maximize an advisory board’s effectiveness, arm them with OnBoard. With features like a drag-and-drop agenda builder, secure messenger, engagement analytics, and board assessments, OnBoard brings a new level of intelligence to board work to increase engagement and clarify priorities, ultimately accelerating startup growth.
Looking for more information on how board management software can help drive your organization forward? Download our free Board Management Software Buyer’s Guide.
Frequently Asked Questions (FAQ)
Should a Startup Have an Advisory Board?
Yes. An advisory board can have a significant impact on the success of your startup. Your advisors can offer insights, connections, and resources, thereby helping grow your business.
Do Startup Advisors Get Paid?
Advisors typically receive between 0.25% and I% shares of your startup, depending on the nature of the advice they provide and the stage of your startup. Ensure that you structure your advisor compensation in a way that doesn’t compromise your equity.
What Makes a Good Startup Advisory Board Member?
A good startup advisory board member should have strong industry expertise and be capable of strategic planning. Their extensive knowledge of your industry will help you avoid mistakes and thrive.
About The Author
- Adam Wire is a Content Marketing Manager at OnBoard who joined the company in 2021. A Ball State University graduate, Adam worked in various content marketing roles at Angi, USA Football, and Adult & Child Health following a 12-year career in newspapers. His favorite part of the job is problem-solving and helping teammates achieve their goals. He lives in Indianapolis with his wife and two dogs. He’s an avid sports fan and foodie who also enjoys lawn and yard work and running.
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