In early-stage startups, especially those raising capital, it’s important to exude confidence to the market. There are so many ways to do this well — from actual traction and results, a strong founding team, an innovative product that’s been incubated in stealth, or a strong market opportunity. In the end, the most successful startups out-execute everyone else in their space and from day one practice drumbeat marketing to tell their story with confidence to the world.
When looking at initially working with a startup, potential investors and early hires, customers, and partners look at key indicators for success — vision, market opportunity, product capability and roadmap, GTM strategy, customer and revenue traction, and financial viability from a look back (P&L performance) and go-forward perspective (3-5 year long-term model). No one wants to work with an immature company that may not be around in a year or two — unless they can display a hardened foundation with immense upside. An upside so grand that people will bet their career on them as we’re all the CEO of our own career.
What Can a Startup Board of Advisors Bring to the Team?
One way to strengthen a core story and bring expertise to a team is through a startup’s board of advisors. Typically, there are 3-5 individuals sought out, compensated by equity in the form of stock options on a vesting schedule, I’ve seen a wide range here .1% to 1.5% or even higher if more actively involved and/or bringing real resources. The typical is .25%-1% at the earliest stages. Usually a 2-3 year vest.
The issue is, advisors are certainly not all created equal. They can be a good or bad use of time and the option pool.
A Startup’s Board of Advisors falls into three categories:
- 90% add no value, are a pic on a slide/website, MIA, reactive
- 5% add negative value, distract, don’t get your business, need to be chased
- 5% add a TON of value, are always available, bring expertise, connect network, proactive
I’d also add that these things, like the usefulness of a board of directors (beyond governance), or alignment of an executive team, are only as good as the CEO and founder’s ability to leverage these folks. That’s the common theme of success and leadership. MOST advisors don’t KNOW how to be valuable.
Leverage the value that your advisors bring. Don’t wait to ask for help or for a scheduled call or board meeting and use them as strength, ask for advice and resources when needed. You’re paying them to help, so use them.
What We Believe
At York IE we’ve created advisory/consulting services to support our portfolio of investments and work directly with many more. We also have investment partners and advisors who introduce and play matchmaker directly with our startups where they can make an impact. Please reach out if we can help. We’re part of #3 above → the proactive and value-multiplier 5%.
It’s important to choose wisely in aligning this talent for many reasons. They represent you but can be expensive and deadweight so they need to deliver a strong ROI. Choose wisely and make it count! 🧠