The Founder’s Guide To Startup Advisors
May 2, 2023
At OpenView, I’m a professional matchmaker. Every day, I connect companies with subject matter experts. After doing this for almost eight years, it’s become a well-oiled machine. We’ve built a network of strong relationships with over 200 industry gurus—and growing.
Startup founders might not come to me with the explicit intent of getting an advisor. But they do know that they are feeling growing pains and want specific guidance on things such as how to:
- Pivot from product-led growth to enterprise sales
- Create a pricing strategy
- Build out a mobile app for a new target market
- Protect intellectual properties
And so with some prodding and additional context, I match founders with experts. If founders benefit from these initial chats, they’ll schedule follow-ups. After a handful of conversations, founders may bring on those experts as formal advisors. Match made!
Throughout the years, I’ve learned a lot about how, when, and why to bring on a startup advisor.
So what is a startup advisor?
Let’s just get the basics out of the way. A startup advisor is an extension of your team who:
- Provides functional subject matter expertise
- Validates and tweaks your company vision
As startup founders, especially first-time founders, you probably have some knowledge gaps. These gaps tend to come from teams you just haven’t had the time to build. You can fill a gap without having to make a full-time hire by bringing on a startup advisor to plug and play.
For example, say you have a strong director of product or lack the bandwidth and budget to bring on a chief product officer.
You could partner with a startup advisor who has scaled a company of your size with similar challenges. With your advisor’s oversight, you can build a strong go-to-market strategy from the start without having to pivot down the road.
James Allgrove, a startup advisor for Seed through Series B startups, has a lot of experience building such GTM strategies. He’s helped companies with everything from transitioning from founder-led sales to creating compensation plans:
“I really love the go-to-market work in these stages as you have the raw materials but need to figure out how to build the right revenue engine for your business. The questions you have to answer at this stage are super interesting and trajectory-defining for startups.”
A startup advisor helps you step out of the founder grind
Startup advisors bring unique assets to the table such as:
- Large networks for you to draw from
- Fresh perspectives and support for tough decisions
- Proven strategies, frameworks and tactics
Startup advisors’ networks can also provide assistance in hiring key staff and winning new clients.
Also, since they’re external, good advisors aren’t biased by your company’s current strategy. Instead, they’re free to bring creative and even controversial ideas to the table without consequence. Since they’re often paying their own success forward, you can trust that their advice is genuine and honest.
On the flip side, you can be honest with your investors as well. James recommends that founders:
“Remember that your advisors are not your lead investors; you should be candid with them on your challenges and they’ll be able to help you more.”
Swaroop Kolli, founder and CEO at Pronto, agrees. “You don’t have to follow everything your advisors recommend,” says Swaroop. “Better yet, challenge them. Ask them if they have personally done what they’re recommending. Do what’s right for your business. Every business is different.”
According to Dan McCool, founder and CPO at Trustworthy, the benefits of advisors extend past professional networks and fresh perspectives.
“Leverage advisors to the fullest. Look at all the ways you might squeeze value out of them,” he says. “Their experience, their domain expertise, their abilities, their network (personal and professional), and their location. Everything.”
The scope of differences between a mentor, startup advisor, and consultant
So before we get into the weeds, here’s my hot take on how startup advisors differ from other part-time “advisory” roles:
While a startup advisor can also serve as a mentor or consultant, it’s rarely the other way around. They’re all related but don’t do the same.
Questions you want to ask a prospective startup advisor
When evaluating a startup advisor, Swaroop says that the most important qualification is that they believe in your idea and team. Beyond that, it’s okay to mimic a job interview. Ask your prospective advisor these questions:
- What was the size of your company when you started?
- What was the size when you ended?
- What was your target market?
- How big were the teams you led?
- What were some of your duties and responsibilities?
- What struggles did your company experience while you were there?
- What successes did your company enjoy?
- Have you advised other companies like mine before?
Beyond those questions, make sure that:
- You personally like the prospective advisor
- There’s no conflict of interest
- The prospective advisor has enough bandwidth to help
Side note: Be realistic about bandwidth. If startup advisors have full-time jobs, for instance, you can’t expect them to commit to weekly meetings with your marketing and product heads. Instead, use a busy advisor as a sounding board over monthly conversations.
Finally, don’t get too caught up on brand names! You might be tempted to get the splashiest titles and company names as advisors. While marquee headshots and bios might look good on your website, those people may not have the time to help you in the way you want or need.
Instead, find prospective advisors who can meaningfully build your business.
Prioritize quality over quantity of meetings with your startup advisor
There’s no perfect template for how often to meet a startup advisor; a certain meeting cadence won’t ensure success. Consider starting small before expanding an advisor’s role. Let them get used to your speed and methodology.
Additionally, you’ll want to get feedback from your functional leaders. And don’t get too caught up on contract terms because they can always change.
As James says, the most important thing is consistency. “Agree up front on the level of engagement you’re expecting and then make sure that happens. Have recurring meetings booked in on that frequency so that you and the advisor are both held accountable.”
Define success with mutually agreed goals upfront
The absolute best way to ensure a successful advisor relationship is simple: agree on specific goals upfront. Throughout your relationship, pull up alongside them to assess progress. If your startup advisor comes in to pivot your company from product-led growth to enterprise sales, for example, assess deal flow in your target market; if it’s growing, your startup advisor is doing their job well.
Dan recommends some other success metrics that might work:
- Time spent advising
- Number of introductions made
- Quality or quantity of advice given
“Create a reasonable set of working metrics so both sides know where the bar is,” said Dan.
Equity or cash: what do you give your startup advisor as compensation?
You can pay your startup advisor in two basic ways: equity or cash. Consider an equity compensation arrangement if you’re:
- Low on cashflow
- Dependent on your startup advisor
Additionally, paying your advisor 0.25% to 1% equity will attract talented experts and invest them from the start (note: this is just a general range—actual amounts vary based on your unique factors, like valuation). Just make sure to have a cliff and vesting schedule so you don’t give ownership to an advisor who doesn’t put in that much time. You should also always use a non-disclosure agreement to avoid giving away proprietary information.
Don’t forget that you’ll want to set up an agreement on paper for you to refer. Many founders and advisors use the FAST agreement, a standard template created by the Founder Institute.
It’s also totally okay to pay a startup advisor a one-time fee or keep them on a retainer. I’ve seen a lot of founders pay their advisors $500 per hour for a monthly chat over six months to start, for example.
Nick Zeckets, CEO and co-founder of Air Traffic Control (ATC), has compensated with equity and cash. After having loose relationships with many advisors at his last startup, he has a tighter set at ATC. All four have scopes of work tied to their advisory agreements.
To further structure advisory relationships, Nick says, “Equity seems ‘free’ early on, but it’s your most valuable commodity. You have to treat it that way. And your advisors should think of your equity as something special. That means you have to sell your advisors as hard as you would your investors or first customers. It also means you should pick who your advisors are. It’s no different than creating a job description…Have clear expectations.”
Find your startup advisor through your network
Swaroop has a strong opinion: “A true advisor won’t ever ask you to make them an advisor. If one is asking you to make them an advisor, run from them.”
Instead, you can find startup advisors through:
- Current investors
- Potential investors
A venture capitalist’s value proposition is all about connections. As I said before, networking is the essence of my role here at OpenView! So if you’ve already partnered with a VC firm, tap into their rich network. If you haven’t raised a round yet, take advantage of potential investors who are trying to prove value.
“If you do the right things, you will eventually outgrow your advisor,” says Swaroop. “Ask your advisor who they look up to; they will be your next set of advisors.”
Networking is hard. If you’re a founder looking to meet your future advisor, why not make it easy on yourself and consider applying to our Mastermind Community? You’ll gain access to monthly educational AMAs, a founders-only Slack community, and connections to some of the greatest leaders in PLG.