A technopreneur can gain huge leverage from an advisory board at minimal cost, but it all depends on the quality of the people. The board can provide independent strategic, fund-raising and specific disciplinary advice (such as in digital marketing or technology) to compliment the technopreneur/management team’s knowledge, and access to their personal network of contacts.

According to Wikipedia, “an advisory board is a body that provides non-binding strategic advice to the management of a corporation, organization, or foundation. The informal nature of an advisory board gives greater flexibility in structure and management compared to the Board of Directors. “

As a guide to getting the right people, we recommend you ask the following questions:

Will the candidate’s skill set and experiences be complimentary to management, filling knowledge gaps?
Successful technopreneurs pull together strong management teams.  However, no startup team is capable of covering all issues and most have blind spots.  Selecting advisory board members with differing backgrounds from those of management, from differing experiences (corporate, entrepreneurial, advisory), cultures, genders, ethnic groups, industries and geographies, etc., supports the analysis process by ensuring the capabilities are available to consider an issue from all potential angles.  Debate should be healthy and comprehensive.

Is the candidate experienced with raising funds for startups?
A key issue all startups face is the raising of funds for the development and growth of the company.  Raising funds requires a substantial effort by key members of the management team, especially the CEO.  Many start-ups encounter significant management distractions during this process, which can last for months.  An advisor with a strong understanding of the fundraising process can both focus management on important aspects of the effort and reduce the process time required and related distraction to the management team.

Does the candidate have a strong network of contacts and influencers?
Advisors with a personal portfolio including significant numbers of contacts can potentially support geometric growth.  Additionally, such advisors usually have a broad and diverse breadth of contacts from which the company may be able to obtain support.

Will the candidate be actively engaged and provide unbiased input?
For the advisor to provide high levels of value, she/he must be willing to engage and actively participate in required company/public meeting and events.  In addition, they must be independent and willing to openly share with and challenge management’s perspectives as well as those of the other advisors.

Is the candidate accessible and available?
Does anyone on the management team know the candidate or does anyone have contacts that can foster an introduction?  If not, are there alternative means of which an introduction can be secured?   Do you believe the candidate possesses the desire and time to support the company by serving as an advisor?  Spending time in pursuit of a candidate who will ultimately be inaccessible or lacks time to actively participate is a distraction and waste of management time.    

Trust is a key factor. To provide valuable input, advisory board members need to know as much as possible about what is going on in the business. The more a technopreneur trusts his/her advisory board members, the more open he/she is likely to be with them. They will be in a far better position to provide constructive advice.

Where do you find candidates? They can often be found in the technopreneur’s personal network, where there already is a trust relationship. Seek out executives in your industry where there is no actual or potential conflict of interest. A grey bearded retiree could also provide great wisdom. A partner in an advisory or venture capital firm can also provide broad informal strategic and capital raising advice. An advisory board becomes unmanageable if it is too big – not more than 8, but 4 is a good number for a young company.

How do you attract high quality candidates? Many candidates will sit on an advisory board for no compensation, particularly if they believe in the technopreneur and the business, and have a desire for the technopreneur to do well. Besides the status, advisory board members can also benefit from exposure to each other’s ideas and perspectives and from networking opportunities.

Technopreneurs don’t generally have the budget to pay the fees that larger companies do, but if compensation is being considered, it should be in share options. The rule of thumb is an equivalent option grant to that given to a director-level hire (who reports to a VP), typically vesting over 2 years with no cliff.

We have also seen “compensation” in the form of an annual get-together of the advisory board in a desirable location, where they get to workshop/strategise on company issues, and also have a great time.

It is definitely worth the effort of having an advisory board at any stage in the evolution of a tech company (and particularly in the early stages), but great care should be taken in selecting the members.