Thursday, April 09, 2009 Advisors and Entrepreneurs By Eric Koefoot @ 11:40 AM :: 1301 Views :: 1 Comments :: Eric Koefoot Blog, Start Up World   As an entrepreneur and angel investor, I also advise startup and early-stage companies.  It is amazing to see the difference in how these companies use their advisors, and it compels me to jot down a few notes on the subject. Here are some of the ways that I've seen companies ask their advisors to contribute: Answering questions about business areas where they have expertise (sales, marketing, funding, stock plans, etc.) Providing feedback on new products and features under development Facilitating introductions to customers, suppliers, and investors Participating in board meetings Contributing to brainstorming sessions about the direction of the company Acting as a friendly shoulder during hard times (a CEOs job can be lonely, and an entrepreneur CEO job doubly so) Which are the best uses of an advisor?  I'd say all of the above.  And if the depth of your advisor pool does not allow these kinds of contributions, then you should consider adding to your advisor team. And what do these advisors ask for in return?  In many cases, nothing.  Many are successful business people who are financially well-off, so compensation is not on the top of their list.  They do appreciate the softer side of the role: Access to cutting edge ideas and technologies Meeting with other advisors (building their network) Participating in challenging business situations Introductions to your investors and key employees (also building their network) And yes, you should consider adding some stock incentive for advisors.  The advisors who contribute thoughtfully and meaningfully should get a little juice.  Equity might range from 0.1% to 2.0%, depending on where you are in the life stage of the company and how much they contribute (time, value, insight, connections). So do you have advisors for your startup?  If so, do you use them effectively?  And if not, why not?

Comments By Anonymous User @ Thursday, April 30, 2009 6:43 PM I agree with this posting. Very useful. I did a post on this topic with some further guidelines on what makes a good advisor. You can find it in "'Documents of Interest" in Start up world, or in my Blog Archives under "Thoughts on a Board of Advisors". Jonathan Click Here to post a comment