Unlock Startup Hypergrowth: Recruit These 5 Advisors Now
Every startup hits inflection points where outside expertise and connections would provide immense value. Whether navigating fundraising, recruiting key hires, developing partnerships, or entering new markets, advisors can shortcut years of learning and push growth faster by supplementing the core team’s skills and network.
This raises important questions - how and when should you recruit advisors? How many advisors are ideal? What’s the best way to interact so it stays valuable for both sides? How (or should) you compensate them? This article will cover optimal strategies startups should use for leveraging external advisors.
Recruiting the Right Advisors
Aim for around 5 core advisors early on - too many voices lead to decision paralysis. Each advisor should offer specific skills, experiences, or connections your core team lacks but needs during your current growth stage.
While big names are enticing, what matters most is their ability to engage actively on key problems. Focus first on addressing blindspots holding you back now rather than just racking up impressive profiles.
The 5 Common advisor archetypes startups recruit:
Fundraising - Look for 3-4 recent lead investors with massive networks. Avoid pure angels. You want advisors opening doors to serious capital - not competing to put in small checks.
Recruiting - Ideally executives with networks into your dream companies. They understand hiring needs at scale and can funnel talent.
Growth/Marketing - Execs with experience building traction across comparable products or industries. Extra points for channel expertise most relevant to your distribution strategies.
Partnerships - Former execs at companies where partnerships would accelerate growth. Key is connections and sway to decision-makers.
Operations/Scaling - Execs with experience rapidly scaling a startup to revenues and team size comparable to your next stage. Extra credit if they previously exited a venture.
Focus on just recruiting 1-2 rockstar advisors in areas most crucial for current growth needs. As the business evolves long-term, you can add advisors over time in new areas important to emerging initiatives. Beyond relevant skills and experiences, evaluate chemistry fit. Even the most qualified advisor on paper won’t add value if personalities conflict.
Optimally Engaging Advisors
Give advisors enough context to add value, but don’t overburden them. Share key documents - pitch decks, financials, product requirement docs, hiring plans, etc - to inform their perspectives.
Schedule brief 30-minute advisory calls monthly. Be prepared with an agenda focused on 2-3 targeted questions needing their insights. Capture detailed notes and document action items while fresh.
Ensure you and your team follow-through completing action items. Advisors lose interest without accountability. Brief near term next steps show you respect their time and input.
Create quarterly advisory board meetings to discuss higher level issues and gather multiple advisor perspectives at once. Especially helpful as you evaluate major pivot decisions with the board.
Proactively share meaningful company updates between calls - fundraising milestones, impressive partnership deals, major new hires, product launches, etc. This fosters engagement plus signals momentum they contributed towards.
Compensating Advisors
Cash compensation is rarely expected for early informal advisors. Serious advisors just want to pay it forward supporting founders plus have good karma backing winning horses early should your valuation explode down the road.
But you should still show tangible gratitude beyond verbal praise and LinkedIn shoutouts. Gift high end client swag - bottles of wine, premium branded apparel, gift cards to exclusive restaurants they name drop - to surprise and delight valued advisors.
If an advisor contributes an utterly game-changing introduction or unexpectedly significant contribution above normal advisory work, consider a small impartial gift as a token of sincere appreciation - 0.25% to 0.5% equity or a few thousand in cash are common gratitude gifts.
And when you close your Series A, allocate 50-100 basis points (0.5% to 1.0% equity) into a broad investor approved option pool earmarked specifically for compensating advisors and key contributors over the long-term.
As advisory meetings evolve into formal board meetings requiring more preparation and accountability, reasonable cash compensation is fair once your Series A or beyond provides the budget.
When engaging a formal board, $200-300 hourly or $1,000-$3,000 monthly retainer arrangements are typical once you reach around the Series A+ stage. Of course, common sense will always come into play - work to match compensation to the true value being contributed as your scale progresses.
Getting the most from your volunteer advisors early on raises your odds of building defensible value and progressing to future financing rounds. Follow these best practices for strategically leveraging external experts to accelerate pathways to scale.
13th December 2023