A great network of advisors can accelerate the trajectory of your startup. They not only open doors, they provide unique insights, lend credibility, speed up success and act as a sounding board to address business challenges quickly.
But, the benefits of an advisor relationship don’t just happen — you have to develop the relationships to set yourself up for success. As a GTM thought leader and investor in over 100 companies through Forum Ventures, I’ve noticed a trend with the most valuable advisor relationships: they follow the six step process outlined below.
Start with an analysis of the gaps through the lens of potential investors and potential customers, answering the question like, “What impresses me about the founder’s (that’s you!) and my team? What concerns do I have? What support will I need? When will I need it?”
Here is a great guide of questions to think through the strengths and weaknesses of your business.
Selecting the ‘right tool for the right problem’ approach, use the analysis of your business to identify if you need a consultant / coach, a new hire, or an advisor:
Advisors are usually tactical or strategic with the support they offer a company. It’s important to understand what kind of support you’re looking for from your advisor:
In my experience, I’ve seen that advisors are usually willing to give 1-3 hours upfront, for free, to assess if there’s a mutual fit. While you are getting to know an advisor, it is important to not only vet the advisor's expertise, but also whether there is a culture fit.
To identify fit, ask yourself:
If there are extenuating circumstances creating temporary fit concerns (such as a lack of availability), keep the relationship warm, but do not swarm.
To achieve this, use tactics such as:
You can also use these tactics to build a relationship with a potential advisor as well. If you’re worried that you’re becoming overbearing, err on the conservative side, back off and re-engage later if there is still interest and fit.
Finally, once you’ve identified a potential advisor, do your diligence. Talk to another company that they have worked with as you would any employee.
If you’ve found a potential advisor who appears to be a good fit, ask them if there is mutual interest and availability. If there is, set up a meeting/call to align expectations for the relationship; a process guided by four golden rules:
Once you’ve aligned goals/expectations in an informal written agreement, you’ll need to put them into an formal advisor agreement. The clearer the expectations for both parties, the more likely you’ll have a fruitful relationship.
Advisory terms usually revolve around two things: compensation & time commitment. The FAST agreement by Founder Institute is a great guideline for equity based compensation and advisor time commitment.
Typical Advisor agreements usually include:
Other details such as how you can use the advisor's name and the types of introductions the advisor will offer should be agreed upon outside of a legal agreement.
When compensating an advisory for their time, we typically see advisors receiving between 0.1% - 1% equity (in Options or RSUs) for ongoing advisory relationships, with the formula being a mix of:
There’s no set formula, and each advisory agreement will be different, so be sure to outline the structure of the relationship in your advisory agreement.
Note: Be cognizant of potential negative signaling from advisors investing (or not investing) in your business. Having an advisor, who is also an investor, but who did not invest could be a negative signal when fundraising. You don’t want a relationship that is supposed to be beneficial turned against you.
With advisory meetings, we find 1:1’s produce the best results. You only have so much time with advisors, and group meetings can lead to lengthy discussions, robbing you of precious time.
There are a few exceptions to the 1:1 rule:
When this happens, you have a couple of options:
Knowledge Sharing Across the Team
This happens when an advisor’s expertise overlaps with an internal team member’s responsibilities - for example bringing your VP Sales into a meeting with your advisor to discuss sales strategy. In these cases, get consent from your advisor ahead of time so there are no surprises and everyone’s time is respected.
Maximizing meeting outcomes stems from good preparation:
Make your asks simple for your advisors to follow up on:
Beyond business advice, focus on building a strong relationship with your advisors – it feels better and pays dividends down the road. If you’re not sure what value to offer, ask your advisor what they are working on and learn about their work. For example, you could provide introductions to other companies if your advisor is also an active investor or help them with talent referrals from your network if their company is hiring.
There are a lot of great resources for learning about advisor relationships. Below are a few additional articles we recommend:
You can find more from Whitney, Managing Partner @ Forum Ventures on Twitter @thesalesmethod, or follow the Forum Ventures on Twitter @forumventures.
At Forum Ventures, we back exceptional founders who are building the future of work. As the leading B2B SaaS accelerator, our 4-month program focuses on go to market, sales, marketing, and fundraising, providing the tools you need to get your startup to scale.