One of the most essential roles to aid you as you develop your startup is a highly qualified advisor. You want someone who has seen their share of exits, product development hurdles, pivots or major rounds of funding. Working with a seasoned veteran who knows what goes into the development and creation of an enduring enterprise can make the difference in how quickly you can get your business off the ground.
In choosing an advisor there are things to consider. For one, you want to make sure they are aware of your market. How well can they see the potential in what you are offering and help you translate and sell it to others? A good advisor can be a strong evangelist, preaching your strong points to those who might not listen as clearly.
Another aspect to consider is at what stage are you at and how well-tailored are they to complement that stage? For example, bringing on a sales powerhouse who has the pipelines and experience to get word out is only useful if you have are ready to generate revenue. If you are still developing your offering, then focusing on someone with a strong product development background may be the better option.
It is perfectly natural to cycle through different types of advisors as you progress. Let your startup’s product and offerings lifecycle dictate the type of advice you seek. What makes an advisor worthwhile is syncing the best of their experience with where you are currently.
Beyond the business strategizing there is the aspect of the relationship itself. Working closely together necessitates finding a personality that works well with your own. You will want someone with whom you can feel both comfortable speaking, as well as unguarded, so that you can rely on them openly. Communication styles often influence how personalities mesh, whether it is in being brief and to the point or discussing things at length. Having similar styles helps greatly in staying in sync.
While being on the same page matters for business and personality, don’t take a “yes man” type. Being able to hear counterpoints and get well thought out ones is essential. If they are too eager to simply validate then you are shortchanging yourself of getting the insight of another fully. What makes a strong advisor is being able to help you see the road ahead and some of the traps you may want to walk into. We all can get a bit blinded at times and it is in those moments where having a well picked person to contradict us is our best resource.
In terms of compensation the norm is a small piece of equity in the business in exchange for their expertise. Standard range is between 0.25 and 1 percent of common stock in exchange for one to two years of advising. If anyone requests something beyond that, be willing to investigate what would have them be worth it. It is possible that they have some particularly strong connections to investors where an additional bump more than makes up for itself but without verifying that it is just creating excessive dilution early on.
All in all adding an advisor into your life can be one of the most powerful choices you make. Choose well and go far.