Thoughts on startups by investors that
fund them & entrepreneurs that run them

The Care and Feeding of Advisory Boards

Sure, you want investors.  But sometimes the outsiders most capable of helping your business are those who invest time, not money.  And I don’t mean because they lend a credible name to an investor pitch: way too many entrepreneurs look at names on Advisory Board as just a way to expedite a raise.  If that’s all you really expect of the Board, you’re cheating yourself as well as the investors before whom you dangled the names.

Proper use of Advisory Boards begins with proper construction.  You want to find people who really are willing to provide a few hours a month.  You want different strengths: industry relationships; deal-making skills; related product knowledge; financial expertise; operational know-how; public profile.  And you want to compensate them with meaningful if not extravagant equity, because you want them to make genuine money if the venture is a success: otherwise, they’re just doing favors, and you’ll drop from the radar screen the moment they get busy.

But the real key to good results is that you have to keep the Board members engaged and educated.  Regular email updates, say once every two weeks, are absolutely vital; as are periodic meetings or calls when the Advisors can all chat together. This is where most entrepreneurs totally fail: they assemble a board, completely ignore it for months, and then one day call up with an out-of-context emergency request.  Of course, the Board member has a hard time being effective … he can barely recall what the company does.

Even more fundamentally, though: you can’t possibly think of all the right questions to ask your Board, or know when they might be helpful.  The only way to discover the real synergies they can deliver is by having the Advisors identify those opportunities themselves.  And of course, the only way they can do that is if they have their fingers on the company’s pulse all the time.

By the way, I’m often asked, if someone “believes” in my company, shouldn’t he show it with an investment, too?  Not really. There are a zillion reasons why a Board member many not also invest: he may not want to “double down” and risk both time and money; or he may be constrained by “real job” commitments. But the best reason is that such dual roles can result in conflicts regarding advice the entrepreneur seeks.  And, anyway, let’s face it. You’re much more likely to get that meeting with the person you want to recruit if you indicate up front that you won’t accept an investment, so your intentions for the meeting are crystal clear.

Please do establish an Advisory Board. But please do not ignore it.


All opinions expressed are those of the author,  and do not necessarily represent those of Gust.

Written by Bob Rice

user Bob Rice Managing Partner,
Tangent Capital

Bob is Managing Partner of Tangent Capital, a registered broker-dealer and merchant bank focused on alternative assets and strategies. He is the resident industry expert on early stage and other private investments for Bloomberg TV, appearing daily as Contributing Editor on “Money Moves.” Bob is a Director of asset management companies with over $2 billion in AUM. Bob began his career as a trial attorney at the U.S. Department of Justice and then became a partner at Milbank, Tweed, Hadley & McCloy, where his practice centered on financial products. He left the law in 1996 to found a 3D graphics technology startup that eventually became the publicly traded Viewpoint, provider of the web’s first “rich media” advertising platform. He has been an active angel investor and startup mentor since 2004. Along the way, Bob also served as the Commissioner of the Professional Chess Association and authored the business strategy book Three Moves Ahead.

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5 thoughts on “The Care and Feeding of Advisory Boards”

  1. Scott says:

    What happens if you directly post to three groups and are then referred by an investor to a different group? How is this handled?

  2. Jschwa says:

    Hi Scott,

    Referrals from one group to another, or from the Investor Community are not counted against the 3 submission limit.

  3. Well I have the same question. It is really nice to see this information. Thanks a lot for this, you helped me a lot. I will definitely use your recommendation.

  4. Abercrombie says:

    What happens if you directly post to three groups and are then referred by an investor to a different group? How is this handled?

  5. Promoting your deal does not allow you to exceed the 3-submission limit. The 3-submission limit is part of Investor Search Engine application guidelines, which are unrelated to the Promote tool.
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