If you’re a young company trying to raise money (i.e. sell venture capitalists on yourselves), or land the first set of customers, one of the first things to put together is an advisory board. It adds credibility to your story, extends your sales effort (now you have more champions of your cause), and increases the attention you’ll get from the right people.
Who To Target
– Who has revenue- or funding-related contacts in your target markets, whether for business development, sales or VC opportunities?
– Where are you weak in experience? Who would be valuable for ongoing management, technical, product design, legal, sales, marketing, startup…etc, advice?
Manage Your Expectations
At any given time, 20% of your advisors will provide 80% of the value. Don’t expect all of them to always be contributing. They’re there for the infrequent but very important times you need something.
Be Proactive
And when you put an advisory board together, it’s up to you to proactively make use of them. They aren’t employees, and have lives of their own. As with investors, proactively keep them appraised of how the business is doing, what it needs, and how they can help you.
Equity and Agreements
The equity is typically anywhere from 0.1% for a well-funded company to 0.5%+ for a very early company. It’s well worth it…for the right person.
Normally, but not always, the company has an actualy advisor agreement as well, which covers the equity/compensation, NDA, etc. Your lawyer should be able to lay their hands on something useful.
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