2 min read Being an advisor to startup organizations can be rewarding in many ways. Advisors can make a significant difference in a startup’s likelihood of success with the right insight, connections, and resources. For those who are beginning their career path as a startup advisor, it is important to understand the industry best practices to ensure they are providing the best help possible to the startups they engage with. In this article, we discuss these best practices and provide advice on how to be the best advisor.
Characteristics of a Good Advisor
The following are characteristics of a good advisor and great goals to aim for as you develop yourself professionally:
- The advisor has first-hand experience in the industry, running a business, closing sales, and more.
- They listen and can relate startups’ problems to actionable solutions.
- The advisor has been through the same challenges and experiences as the startup is going through.
- They ask meaningful questions and probe to get to the bottom of things.
- Understand the startups’ point of view and can motivate them.
- They have opinions and share them even if those opinions are not popular.
- Advisory work is an important part of their time.
- They are effective communicators. They are articulate and can persuade.
- Provide actionable steps to help accomplish goals.
- They bring a network of investors, other advisors, and collaborators.
- Understanding of others’ opinions.
- Their work is their passion.
How to Be a Good Advisor
In choosing a startup to advise, it’s important to find the right fit. Here are some key points to make sure you are a good advisor to the startup you are aiming to collaborate with:
- Spend time with the startup to really understand if you can add value and if they are ready for an advisor.
- Make sure you communicate well with each other and ensure the personal style fits.
- Spend as much time on selecting a startup as you would an investment.
- If they have other advisors, check with them about their experience.
- Find out where they need the help the most.
- Ask what’s slowing them down and where they avoid engaging. That’s an indication they need help.
- Avoid the day-to-day minutiae and focus on strategic objectives.
- For the day-to-day work, make introductions to people who can solve those issues.
- Make clear you will play the role of devil’s advocate and that you will ask a lot of difficult questions as part of your job.
- Spend the majority of your time with the startup listening and only talking when you have something important to say.
- Get to know the founder and others in the startup outside of work.
- Come to an agreement about the time commitment for your work with the startup.
- Give the founder the hard answers as in the end, they will appreciate that more than the kudos. If the founder seems to be scattered, help them focus on a few key priorities.
- If it turns out not to be a good fit, then help the founder close it out.
Finding a Startup to Advise
Here are some key points to consider when finding a startup to advise:
- Choose startups that you can help.
- Make clear the work you plan to do such as introductions, networking, advising on the domain, or just sharing business experience.
- Define the duration of the advisor work- one to two years is a common timeframe.
- Determine the frequency and type of meetings, for example by phone, in person, or in a group meeting.
- Set aside time to do the work.
- Negotiate compensation based on the work to be done. Compensation consists of a half percent to one percent of equity vested over time.
- Be prepared to sign a non-disclosure and non-compete agreement.
- Have informal reviews with the company throughout the process to make sure you are meeting expectations.
- Add your name to the team as an advisor to help with fundraising activities.
- Join sales meetings where you can add value.
Keep in mind, advising can be rewarding but it always comes at a cost: time and effort.
Read more on the TEN Capital Guide: Advising a Startup
Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: email@example.com