What's the best way to assemble a board of advisors/mentors?

Peldi from Balsamiq Mockups built a nice board of advisors. He explained how he did it (even with the actual email template) and how it's working out for him in this interview with him.

To directly answer, usually they'll be in your network, because "advising" is a significant time investment and strangers are unlikely to want to do that.

Aiming high is good, but consider starting with some more accessible folks, and then approaching others once you can point to a few other people who are already on board.

(Disclaimer: helping companies create a board of advisors is part of what I do for a living.)

First of all, congratulations on recognizing the value of establishing a board of advisors -- many entrepreneurs give little thought to this incredibly valuable resource.

Next, allow me to respectfully demur as to some of the other comments by saying that an ideal board of advisors is likely to be from outside your network. Advisors are quite often very highly placed in companies you would never dream would be interested in your little venture. And that's true: the company may not be interested, but the specific individual just might. Senior executives often have an entrepreneurial itch that is not being scratched in their normal jobs. Your advisory board provides them an opportunity to stretch themselves, and gives your venture an opening to form a strategic partnership with a company you could never have reached otherwise.

Which brings me to my next point: the best strategic advisors are connected, not necessarily to you, but to the companies with whom you'd like to partner. Note that I say "partner" rather than "sell to": the advisory board is not a great place for prospects or customers (although a separate customer advisory board is a great resource as well). Through his or her participation in your startup's advisory board, the advisor will get to know you and your company, and the odds of putting together some kind of strategic deal with the advisor's company are greatly enhanced.

Because the ideal member of your strategic advisory board likely comes from outside your network, it is often advisable to use a third party to make the approach. And that is the only self-serving comment I will include in this response. :)

Finally, it is important to distinguish between your advisory board and your board of directors. It is very unlikely that an advisory board member would ever become a director, unless you end up doing a merger or equity funding with the advisor's firm. The requirements are simply very different.

Good luck!

Scott

What I think I'm seeing emerge here are two schools of thought. There's the "Jason/Balsamiq school," which favors a very informal advisory board comprised primarily of people you already know and admire. Then there's the "Scott/Warrick school," which favors a more formal organization, assembled from industry veterans with specific connections or skills that might be of value to your company.

Do you guys think that's a fair observation?

Ultimately, it's going to be a function of what you're comfortable with, and what seems to you to have the most value. I also don't think they're entirely mutually exclusive: you should always be able to go to your network for advice and support -- that's what makes them your network! That doesn't rule out the creation of a structured advisory board at the point at which you are comfortable moving forward with it.

Dan,

I recommend all my clients start by reexamining and if necessary restating the vision they have for their organization and then completing a SWOT analysis (strengths, weaknesses, opportunities & threats). By comparing the the vision against the SWOT you will find the gaps in skills and talents your company needs to fill. If the gaps can't be filled by existing or soon to be hired staff then look to appointing advisors that can fill the gap for the foreseeable future.

Susan C. Hammond www.advisoryboardkit.com

I second Scott's response and add that having a pln for he structure of your Advisory Board is also very important. I am on the Advisory Board of several start-ups, mainly as a result of an angel investment, and in all cases I am on the AB because I bring something specific to the table that will be useful to the start-up as it grows and develops. My advice is to create a simple table listing functional and domain expertise you need and then assign each one a priority, ideally then resulting in targetting individuals that bring a combination of both. So for example you may plan to sell your solution into wireless carriers, so domain expertise in the carrier/telco space would be important as well appropriate functional expertise in mobile app development - I am overly simplifying here.

I would also advise formalizing the arrangement you will have with your AB - set aside some of your option plan for advisors, draft up an agreement that lays out what you will be asking them to do, how much time they will commit and what they will get in return....a 0.1% stake vesting over 2 years, with expanses covered for a quarterly meeting of 2 hours and up to 10 hours a quarter of phone calls is a good starting point.

Good luck, Warrick

If you're not that well connected, you might consider collecting a more informal group of advisors - perhaps people who can be a simple sounding board for you. The best sounding boards I've found were just mild acquaintances who I found to be incredibly like-minded (though this doesn't mean they always agree with me) after some conversations. Its a start and through secondary or tertiary contacts, you'll network and find the kind of people you're looking for - connected, deep pockets, that sort of thing.

Dan, I would also add that you need to decide which areas do you really need help with. In addition, I would recommend that at least one member of the board (probably the core member) is someone who is a "serial entrepreneur" and has experience dealing with advisory boards and being and adviser him/herself.

In general, if you find a person who is:

a) experienced and interested in your kind of business; b) likes dealing with you and your co-founders over time; c) you like to deal with for the long-term d) has experience being and adviser, then you might have a good candidate.

For example. Do you need help raising money from angels? Then consider finding and networking with someone who has done it before; take your time though.

Do you need sales help (connections), then find someone who has been doing sales in your target market and has current connections in that specific market. Simple introductions in this case can get you a long way ahead. In fact, in some markets it is the only way to get in.

I would stress again that it is important to decide what is the target composition of your board. Remember, the advisers will later become members of the board of directors, with equity, and you want to have a board that really does want to grow the business.

From the structural perspective, having some kind of an agreement is standard, and if you do find an experienced adviser, then s/he is likely to have a reference agreement (or template of one) for you to start with.

Setting up an advisory board is an important step, and I hope you find my comments somewhat helpful.
Good luck! -Stas Antons (SmartSymbols.com)

Anyone have any comments on current practice on advisor compensation? Also does anyone have a template agreement for advisory boards?