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Advisory Board for a startup- useful or not?

Looking for feedback from startup Entrepreneurs if you used an Advisory Board in the initial phase, and if so, did you grant them equity?

Answers

Jerry JD Davis
Title: # 2 knutter
Company: kratenutz.com LLC
(# 2 knutter, kratenutz.com LLC) |

For us a board isan equity based group that helps with corporate governance, some idea resource sharing, and general oversite. We will have advisory boards for different iniatives and base any compensation on there importance to the success of the company. It is my firm belief that any form of a "Board", from start-up to exit, is important to ones success.

Jeff Taylor
Title: CFO
Company: Communications Co.
(CFO, Communications Co.) |

I highly recommend pulling in an advisory board. They bring a lot of ideas and they can be supremely helpful connecting you with everyone from investors to trusted service providers to customers. And they will work for stock (or at least they should).

Advisors can be hit-or-miss, and it is your responsibility to stay connected with them and get the most out of them. My greatest challenge is actually following up with our advisors regularly and leveraging what they have to offer.

And, unlike your actual board of directors, you don't have to follow every crazy idea they bring to the table (okay, you don't have to do that regardless, but with your regular board you frequently have to acknowledge and walk a few steps down the path before rejecting something).

Topic Expert
Brenda Morris
Title: Board of Directors, Audit Committee Chai..
Company: Boot Barn
(Board of Directors, Audit Committee Chair, Boot Barn) |

I agree it is in incredibly important to have advisors, those that can provide you with ideas, resources and connections you may not have had. The biggest complaint I hear is that these advisors are courted, engaged, and excited about the roles and then never used or used in a limited way that doesn't keep them in the loop or relevant to you and is a disappointment to the advisor. Absolutely, find great advisors, and then be sure to establish a process to communicate to them and keep them engaged in your business and your needs.

Jerry Goldberg
Title: Principal
Company: Strategic Capital Corp
(Principal, Strategic Capital Corp) |

I absoultely believe in advisory boards for start-ups (and somewhat larger companies)with one caveat: chose members that truly bring somrething to the table, be it years of industry or management experience, connections to funding or customers, or in general just a respected sounding board for ideas in your industry or niche. If it's just for an ego trip or a nice gesture to some friends, skip it - they wil lbe there for you anyway.

Topic Expert
Deborah Godfrey
Title: Budget Administrator, Business Manager, ..
Company: Seeking Employment
(Budget Administrator, Business Manager, Project/Program Manager, Seeking Employment) |

I recently attended the Atlanta Urban Entrepreneurship Forum and the question of advisory boards came up. After listening to the discussion and getting information to ponder on, I believe it is worthwhile to utilize an advisory board. A board can help you see ideas from different perspectives, highlight important steps in the process and will also bring of knowledge experience to you from different fields.

Topic Expert
Simon Westbrook
Title: CFO
Company: Aargo Inc.
( CFO, Aargo Inc.) |

I have found Advisory boards very helpful, especially in the early stages of development. Finding non executive Board members can by tricky with concerns for liability issues, especially with funding and shareholder matters in the early days. The advisor can be just as valuable, without any of the liability issues. Advisors with specific experience and qualifications can be valuable at different stages of the corporate life cycle, for example having advisors connected to investors can bring credibility and introductions, having ones with industry experience can broaden the business's depth of technical knowledge, and pad out a management team. I have seen anywhere from a couple to ten advisors but dont believe that it is prectical for executive mangement to handle more then three or four . Brenda's point about communication and engagement is critical. Generally advisors are paid in stock options that vest over a service period, and they vest whether they contribute or note. Since advisors are necessarily part time and occasional performers in the team, they have other full time jobs and responsinbilities which can keep them busy. I recommend that you hold regular advisor meetings and assign written objectives that exploit the values you saw in them when you engaged.

Topic Expert
Brenda Morris
Title: Board of Directors, Audit Committee Chai..
Company: Boot Barn
(Board of Directors, Audit Committee Chair, Boot Barn) |

That's a great point Simon. If you engage the advisors by granting them a small option that has an evergreen component (adds more grants over time) then they are often more motivated to bring value to the table for you and the company and YOU have the expectation that they perform value adding service as a board member. If you can communicate the long term opportunities to he potential advisors it will get them more excited to be a part of the early stages of your company as well.

Topic Expert
Dana Price
Title: Vice President, M&A
Company: McGraw Hill Education
(Vice President, M&A, McGraw Hill Education) |

Thank you all for your helpful comments!

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