No matter how many books you read or courses you take, building great startups is a skill that you learn through practice and experience. What’s more, even so-called “solo founders” benefit from the advice and expertise that they receive from the people around them.
That’s why so many startup founders seek counsel from people who have already been in their shoes. Whether it’s your first or fiftieth time launching a startup, you can benefit from the help of startup mentors in order to make smarter business decisions and accelerate your business growth.
Why do startups need advisors?
Large, established companies have dozens, hundreds, or thousands of employees, including a full suite of executives and board members. With so much expertise on hand, there’s little need to look outside the business for advice.
Startups, on the other hand, have a smaller staff and operate with a lean mindset. Employees often have to play multiple startup roles, wearing different hats on a day-to-day basis. Given these limitations, having a knowledgeable mentor just a phone call away can be an invaluable resource.
The benefits of having a startup advisor include:
- Accessing expertise: Much like finding the right startup cofounder, advisors can help compensate for the gaps in your own profile—whether that’s technical know-how or in-depth experience with your company’s industry. Advisors can also provide a “second pair of eyes,” offering a more objective, third-party perspective for your startup ideas.
- Making connections: Advisors are often established, respected, and well-connected in the startup community. If you’re looking for new hires, ideas, or sources of funding, having a startup advisor on your side can help grease the wheels and get your business rolling.
- Providing mentorship: When the going gets tough, startup advisors can offer a friendly ear (or shoulder to cry on) and help you navigate business obstacles. Every company faces roadblocks on the way to success, and having a trusted advisor in your corner will make it that much easier to overcome them.
What’s more, the advantages of having a startup advisor will depend on your advisor’s competencies and experience. The skill sets you may want to look for from your advisor include:
- Sales and marketing: Advisors can help you develop a comprehensive sales and marketing strategy, or offer guidance in specialties such as digital marketing, outbound sales, or user acquisition.
- Fundraising: Well-connected advisors (e.g. venture capitalists or angel investors) can help you work on your fundraising pitch and put you in contact with potential investors.
- Product management: Startup advisors can help you develop a business vision and turn your product concept into reality, making progress one step at a time.
What does an advisor do in a company?
A startup advisor is an individual whose primary role is to offer leadership through coaching for startup founders. Startup advisors can spend time offering guidance and mentoring, or help founders make the right connections (e.g. with other entrepreneurs or angel investors). Advisors usually possess in-depth professional experience in a specific area, industry or subject, and have often founded a business themselves.
Startup advisors play many roles, depending on the founder’s needs. In an early-stage startup, an advisor may help evaluate product ideas or hire a startup CTO. Late-stage startups, meanwhile, might look for advisors who can help with fundraising and acquisition.
In fact, it’s almost inevitable that you’ll want different types of guidance from startup advisors as the business grows. The issues with which you may need advice include:
- Business legal structure (LLC, S Corp, C Corp, etc.)
- Accounting and finance
- Legal advice (intellectual property, NDAs, etc.)
- Human resources (hiring, onboarding, training, management, and firing)
- Acquiring your first customers
- Sales and marketing campaigns
- Expanding into new markets, industries, or geographical regions
- Partnering with new distributors or vendors
- Growing the business and scaling up operations
This list is far from comprehensive—and if you find a startup advisor who can help with just these few matters, you’re very lucky indeed. That’s why some founders create a full-fledged startup advisory board, filled with people with different areas of expertise who can pitch in when they’re needed.
How do I become a startup advisor?
Having an advisor at your fingertips can greatly benefit your startup and accelerate your business growth. But once you’ve successfully exited, what if you want to parlay your experience into a role as a startup advisor yourself?
At a minimum, good advisors should have experience running one or more successful startups. These people are often able to point to specific accomplishments that they achieved during their startup tenure, whether that’s quantified in terms of app downloads, website visits, or products sold.
Good startup advisors should also have a few important personality traits. Startup advisors should be passionate about teaching, mentoring, and helping others achieve success. In addition, while your advice may help tip the scales when making decisions, you must be willing to take a step back and acknowledge that it’s not your business—the CEO is ultimately in control.
Once you’ve established your value as a startup advisor, you can look for companies to work with through your personal and professional networks. Many startup advisors are in demand by achieving renown in their field, whether as a thought leader, influencer, professor, or researcher.
After finding a startup to work with, you’ll also need to discuss the issue of advisor compensation. Some advisors perform their work pro bono, finding value in the act of building a startup itself. Others, however, receive a small amount of equity compensation in the business.
How much startup advisor equity should mentors receive? The exact percentage will depend on the value that you provide. Generally, advisors who receive equity will earn between 0.25 and 1 percent of shares in the business. Also note that these shares may be on a vesting schedule over several years to encourage building long-term relationships.
Startup advisors might act as a solo mentor, or they might be part of the company’s board of directors. The former case will likely require more knowledge and work on your part, but you’ll likely receive a greater equity stake as compensation. Solo advisors are often consulted for their expertise in a specific area, such as best practices for using a particular technology.
Serving on a startup advisory board, meanwhile, is usually a smaller commitment. Multiple board members can each offer help when needed and bring their unique expertise to the table. In contrast to solo advisors, startup advisors on a board of directors are more likely to be valued for their broader strategic outlook and sound decision-making skills.