One of the most common questions early stage founders ask me is how to work with advisors.
But most of the commentary about advisors just emphasizes that they can help by giving strategic advice. That’s definitely true but finding, vetting, and working with the right advisors has a lot more to it than that.
Let’s get into it 👇
Read time: 5 minutes
How to Find, Vet, and Work With Advisors
Why Would You Want Advisors, Anyway?
The most legitimate reason to not want advisors is that it’d be better for your startup if they invest a small check, rather than just collecting advisory shares.
While true, the early days of a startup are incredible hard for founders and risky for investors. Not everyone who wants to help the startup succeed is willing to put in a check right away, even if they believe in the mission and the founders.
Getting access to connections and learnings that would otherwise take intense trial and error can be like a cheat code for a startup.
With that said, definitely test the waters and see if they’re willing to put in even a small $10k check. It’ll be more meaningful when they make intros for you when you’re fundraising if they’ve invested.
How and Where to Meet Advisors
The best place to find advisors is within your own extended network. Your connections, or second-degree connections, can help here.
But I want to focus on the other case, where you don’t have connections, because even if you don’t have an extensive network, you have options for how to meet advisors.
Early customers → If you’re selling into large, established companies you may come across customers who fit the profile of a good advisor (see below).
Accelerators → Y Combinator and Hyper both do a great job of introducing you to potential advisors, as do many other accelerators.
Events → Investing time in building your network through IRL startup events can quickly expand your pool of potential advisors.
Communities → Digital communities focused on specific industries can be a great place to find advisors. For example, Lenny Rachitsky’s community would be a great place to find an advisor on product.
If all else fails, cold email can work. In my career, I’ve used it for everything from landing a job at Uber to getting investors interested in my startup.
Good Advisor / Bad Advisor
The right advisors for you and your startup are specific to you. Assess your cofounding team’s weaknesses and map that against the current and future needs of the specific business you’re starting.
For example, if you’re disrupting the insurance industry but don’t have anyone on the team with deep regulatory knowledge, you should probably find an advisor who does.
With that said, good advisors and bad advisors both have some common characteristics:
Good advisors have some of the same traits as good early employees
What to Offer Advisors
Potential advisors will ask for either:
An equity stake
A recurring cash “salary”
Both
Each of those includes a wide range. It’s sort of the wild west, especially for first time founders.
The way to get around this is by creating a “standard” advisor offer for all advisors at your startup, and just being upfront with any potential advisors about that.
Advisors typically have a lot more experience negotiating these types of deals than founders do. It’s in the founder’s (and the startup’s!) best interest to keep things as simple and standard as possible.
I advise startups to offer a standard 0.10% - 0.20% to equity-based advisors, and have a firm stance on whether advisors are eligible for cash instead of or in addition to equity (or not at all). This is lower than Carta says the average pre-seed advisor gets, but firm pushback from good advisors is rare.
You may lose some potential advisors if you’re firm on this, and it’s up to you if you want to bend your standard deal. In my experience, founders tend to overestimate the impact that any one specific advisor will have (though the right advisor may be worth a lot more than this).
Here are some other standards I recommend:
2 year, monthly vesting
No cliff (begin vesting immediately)
Able to be terminated at any time with immediate effect and no accelerators
How to Set Expectations with Advisors
In order for an advisor relationship to be successful, they need to know what you expect of them.
Be extremely clear about this. If you need them to deliver against specific business goals, make sure you discuss it in advance and include it in your signed advisor agreement.
This protects you, if they aren’t delivering, you have a clear mandate to end the agreement and end their vesting.
What to Realistically Expect From Advisors
Strategic advice is something helpful that advisors offer, but most articles I’ve read over-index on this. Aside from advice, advisors add value through:
Credibility → if they legitimately have it, it can help when you’re fundraising
Connections → for investments, customers, partnerships, etc.
Getting their hands dirty
Most advisors won’t end up getting their hands dirty, but some common things you can ask them to do include:
Vet early employees in an area you don’t know
Work through legal and regulatory situations together
Evaluate your pitch deck + fundraise strategy
Miscellaneous other tasks (ask!)
It’s extremely rare that an advisor will make or break your startup, but these things can definitely help you move faster.
How to Vet Advisors
The best way to vet an advisor is to ask them to do something.
If a potential advisor really wants to see your company succeed, they’ll help out even before they’re vesting equity. The advisor relationships that founders most consistently rave to me about tend to start with the advisor doing things before even talking to the founder about formally coming onboard.
The second best way to vet them is by doing a reference check on them.
This may be controversial but when considering bringing on an advisor you need people’s raw, honest feedback about them, so consider a blind reference check (that article is about employees but it’s relevant for advisors as well).
Check local regulations before doing them though, as some jurisdictions actually don’t allow them.
Getting the Most Out of Your Advisors
Your advisors can’t read your mind. Early stage startups move so fast, it’s on you to keep them in the loop.
Be proactive. Send regular, detailed updates with clear, concise asks.
If you have time, loop your advisors into occasional jam sessions.
Also, learn their network. I’ve even seen founders scrape their advisors’ LinkedIn networks so that they know who their advisor can intro them to when it’s needed.
How to End an Advisory Relationship
Sometimes advisor relationships don’t work out.
If you set clear expectations at the start, it should be pretty evident when goals aren’t being hit. But even if you didn’t, you may need to cut the cord sometimes.
If your advisor feels differently, and that they were meeting goals, consult with your counsel about your options for termination. As long as you didn’t give away too much equity, the downside is relatively low.
📚️ Founder’s Corner
Carta has a robust guide on how to think about and issue advisory shares
Two different templates for advisor relationships (one, two)
First Round Capital shares 7 additional tactics for getting the most out of your advisors
My investor database is now live for subscribers!
And you can easily search and filter it by name, sector, stage, and event past investments the investors have made.
You can also copy/paste the link here: https://anyhouck.com/subscribe?ref=PLACEHOLDER
Get the next one.
One essay every Sunday on the decisions that make or break founders.