According to a recent study by Startup Geome: Startups that have helpful mentors raise 7 times more money, and have 3.5 times better user growth, than new businesses that do not explicitly seek out the assistance of experts.
It’s not a coach, mentor, investor, lawyer or accountant. It’s someone who has experience in building companies like yours. A startup advisor can be an invaluable asset to help you structure your company, raise funding or replicate your business solutions for profitable growth.
We’re a Russian-born business that is now expanding globally. We have top international advisors who help us to grow our business (Chris Adelsbach, Founding Partner at Outrun Ventures; Dutta Satadip, Global Head of Customer Success and Operations at Pinterest; and Joel Wishkovsky, founder of Simple Health). If you want somebody to actually help you steer your venture, rather than just drop words of wisdom every now and then, try using these pointers in selecting your people.
1. The right hire has an actual interest in your company
A recent survey of 1,000 American entrepreneurs conducted by Kajabi –a knowledge commerce platform–found that business owners remain motivated by continuing to meet needs in their community (53%) and being passionate about their work (43%).
Your prospective advisor should be equally excited about what your passion project can do.
Although the aide must be honest in pointing out the shortcomings of your product, he or she must nevertheless believe in it.
You should see almost the same light in the eyes of your advisor as to the one you have when you talk about your idea. An advisor should be willing to help prior to discussing any terms or equity. If he or she is genuinely interested, they will be thinking about your company, maintaining contact and sending information. .
While you should negotiate a share in your company that the advisor will receive for the work done, you should see interest in receiving a fair amount, not a greedy desire to get as much out of you as possible, but interest in sharing in your overall success. Note that if said expert says “we” when discussing your future, it is probably a very good sign.
2. Discussing working conditions
It is important to not confuse the concepts that are mentor, consultant and advisor.
A mentor is a person who likes what you do and is willing to call you every few months to share contacts. This does not imply regular feedback and continuous involvement.
A consultant is someone who has the specific expertise you need at a particular moment. You pay him or her an hourly rate to do a certain type of job.
An advisor is a full-on member of your movement, willing to dedicate time to your team on a regular basis. It’s a long-term relationship built with consistent engagement. What’s more, this kind of aide usually has a stake in a company and ends up becoming your partner.
Avoid the ones who ask for cash during the first stage and want to discuss equity later. This is a very bad omen. I refer to such individuals as cashiers.
Often start-ups at a very early stage will be willing to share almost any stake as long as someone will help them. At this point, a potential (and bad) advisor may ask for 5% of your company. Imagine the best-case scenario in 3 years and consider what equity will be given to advisors under such a scenario.
The earlier an aide joins a company, the higher the share they will usually be granted. As a rule, you are not expected to give them more than 0.2%-1% equity in the company.
The Founder Institute has developed The FAST agreement (Founder Advisor Standard Template), which has already been used by tens of thousands of entrepreneurs to fix the terms and price when a company hires their guy or gal.
Do not forget that advisors’ shares should also be vested and have as much of a cliff as anyone else on the team.
To offer equity or not to offer equity: When a person receives shares in your company, it is not only a payment for their participation but rather a sign that he or she believes in your company. It is also looked at as a positive to investors, potential employees and customers. It means that the advisor has agreed to be with you for the long run.
3. Acquiescing to their advising
The first thing to do is to send out regular amendments to keep them up to date.
It is important to describe what you did AND how you did it. This will help them to analyze your work and provide advice.
Secondly, you can only get maximum help when you are as open as possible. The important thing here is not to focus on your achievements, but to describe all the aspects that you do not understand. What you need is expertise, provided in an understandable way.
If you request an intro, prepare a table of companies, funds and names while explaining why you need it. Advisors can fill in this table immediately so that they do not have to do the same job with the same person at the same time. You can also expedite the work of prospective aides by providing them with contacts on LinkedIn.
The key is to ask as many questions as possible while letting advisors ask you the same amount of queries. My go-to: “Is there something I should have asked you, but I didn’t”. This usually gets the most valuable answers.
4. The best of the bunch have skills you don’t
Send your product, or even its prototype, to your potential advisor.
Ask the candidate to use it and share an expert opinion. Pay attention to those who, instead of stroking your ego, point out weaknesses in the mission statement. Talk to those who will be tough, not ingratiating. Be sure to call on those with whom you fundamentally disagree with—they are the ones you will most need.
Your advisor’s phone book should be different from yours but eventually become yours.
Along with the people you have already contacted, mention the possibles you have not and find out whether the opinion of the advisor coincides with the opinions of those you trust. During the meeting, ask about finding a provider. The right advisor will not have to think twice. A list of the right contacts should be right at his or her fingertips.
The best indicator is when a potential hire offers to make an intro without you asking and prior to formalizing your relationship. It will serve as a great sign that he or she genuinely cares about what you’re doing and is willing to put in the effort, regardless of compensation.
5. Be brutally honest
The first meeting should be a long one.
You have the right to ask questions, not only about your startup, but about anything else that is important to you. Guy Kawasaki has compiled a list of questions you can offer perspectives. Remember you are choosing not only a professional but also a personality. That’s why it’s very important to have a good fit with your possible aide.
Last but not least, remember that even if you pick a good one, he or she is only with you to give you advice. The decisions are always made solely by you. An A-List aide will never be offended if you don’t follow his or her advice. The right hire understands who is in charge. Help them help you. Plan the agenda of your meetings in advance and be as transparent as possible.