Steve: One of the greatest assets an entrepreneur can have is an Advisory Board.
And the best part is that it costs very little. The “right” Advisory Board
members contribute invaluable guidance and advice and provide access to
networks of industry, target audience and financing resources.
When I suggest the formation of an Advisory Board, the entrepreneur often
responds, “But how can I afford that?” My answer is that if an Advisory
Board candidate asks how much they’re going to be paid, they’re not the
right candidate. The “right” candidates want to be on the Advisory Board to
“give back”. When they started their companies, they had mentors and guides
and now it’s their turn. They want to pay it forward. Initially dinner once
a quarter and a few stock options will be appreciated.
Who should be on an Advisory Board? I always suggest three types of people:
(i) a serial entrepreneur, a person who has taken more than one company
from start-up to liquidity event, a person who has walked in the
entrepreneur’s shoes, who has experienced the business ups and downs and
has had success (and it’s certainly helpful if the serial entrepreneur’s
businesses are somewhat related to the entrepreneur’s business); (ii) a
serial CFO (and I don’t mean a numbers cruncher), a person who has been a
CFO at more than one company from start-up to liquidity event, who has
built revenue models, has been through stage-appropriate financings and has
financing contacts; and (iii) a person who knows the target audience of
the entrepreneur’s company and can open doors to new customers, synergistic
relations and down the road even acquisition targets.
A major key to an entrepreneur’s success is the team around him or her.
Having a great CFO or CTO or VP Marketing/Sales is important but a strong
Advisory Board can be invaluable.
Partner & Entrepreneur-in-Residence
Gesmer Updegrove LLP
40 Broad Street
Boston, MA 02109
(617) 531-8374 (direct line)
(617) 513-3989 (cell phone)