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
