Every great startup is nurtured by a great community. Often times that community can include a management team, board of directors and advisors. Smart founders understand how the support of high-profile advisors can offer PR, connections, capital and clout. However, the process of choosing the right advisor requires a strategic outlook.
I am fortunate to work with founders who clearly knew what they needed and how our relationship would look. 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, I had no interest in learning about their space. In these cases, I try to offer constructive feedback and make a targeted introduction when applicable.
Given that team building can be such a time-consuming undertaking, I recommend a more thoughtful approach to finding advisors. So, take time to ask these questions before reaching out to a potential startup advisor:
What do we need right now?
The complexity of launching a startup calls for a set of advisors who can assist with making things happen. Whether it’s a targeted introduction or business advice on user acquisition, be sure you know exactly what you need from the advisor you’re targeting. You may find that a particular advisor is not right for your company after all. Or maybe you need to hold off bringing them on board.
Does this person care about our space?
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. Angel investor and investment partner at Upfront Ventures, Mark Suster discusses the unfortunate things that happen when an investor doesn’t really understand the business, its landscape or fundamental challenges. Suster acknowledges in his blog, BothSidesofTheTable.com, that “Most entrepreneurs I encounter seem to make their decisions more on perceived brand, past successes and ability to intro. These decisions are always nuanced – make sure your thought process is as well.”
Are we prepared to answer the tough questions?
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.
What are we hoping to gain from this partnership?
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.
How will we compensate this advisor?
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.
This article has been edited and condensed.
Lisa Nicole Bell is an award-winning producer and entrepreneur. She currently serves as the CEO of Inspired Life Media Group, a content development company that produces and distributes content for television and the web. Connect with @lisanicolebell on Twitter.
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