Advisory Boards

I can’t tell you how many companies come in and present and inevitably, somewhere in the deck, is a list of advisors.  Of course, as I dig in to understand what these advisors actually do for the company, 9 times out of 10 they are just high profile names that are thrown on a list to give a company a stamp of approval.  Trust me, I am all for advisory boards.  In fact, many of my portfolio companies have them.  Many entrepreneurs or management team put together advisory boards to get real expertise on product direction, the market, and to expand their network to reach new customers and partners.  Advisory boards can be especially great because the typical relationship is usually noncash and compensation is based on options which vest over a period of time.  So the cash-hungry startup can add talent and help without breaking the bank. However, like any business relationship, it is important to figure out what you want from each advisor, what their time commitment and interest level really is, and then structure the appropriate role and responsibilities. I, like most VCs, am more impressed with companies that have advisory boards that are structured and actually do real work for the company versus seeing just another list of names.

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