Starting a business is an exciting journey, but it can also be challenging, which is why finding a startup advisor can be so beneficial. An advisor can provide valuable guidance, help you avoid common pitfalls, and connect you with potential investors.
The role of a startup advisor
In the startup world, an advisor is a seasoned professional who offers insights, mentorship, and networking opportunities to startup founders and teams. They often have extensive experience in the industry and specialized knowledge in areas such as business strategy, technology consulting, marketing strategy, or finance.
The role of a startup advisor is to provide business advice, serve as a sounding board for your ideas, and give recommendations to improve your startup. They can also introduce you to their network, which is helpful if you’re looking for new talent or need guidance when raising capital.
Types of startup advisors
There are many different ways advisors can help. Some will take on a more active advisory role, while others are less involved but might have valuable name recognition, which can be used in your fundraising pitch deck or website to add credibility and trust. You can find a startup advisor for just about any area of expertise, but the most common areas of startup advice are growth, marketing, and product.
Here are some types of advisors to consider:
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An experienced product manager in your particular market
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An experienced marketer who has a proven track record in digital marketing, inbound marketing, and user acquisition
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A well-connected PR professional
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Leadership and executive coaches
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Fundraising advisors
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M&A advisors
Startup advisors vs. other types of support
It’s important to understand the differences between advisors, mentors, investors, and consultants. While they all provide guidance and support, there are some key differences:
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Advisors are chosen and used for a varying range of topics. They usually provide time, expertise, and connections to a startup and aren't pre-selected by an accelerator or incubator. Usually, advisors receive a form of payment from the company, such as advisory shares or cash. |
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Mentors are unpaid and act in an informal capacity. |
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Investors provide cash in return for equity in a startup. |
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Consultants play a similar role as advisors but most often are hired to perform one or more specific tasks or projects and are paid in cash. |
Building your startup advisory board
When building your early-stage startup’s advisory board, it’s important to determine when you need one. Generally, you’ll want to seek out a startup advisor when you have a specific reason for doing so. This could be that you’re just forming your first business venture and aren’t sure about some of the legal and compliance issues facing your business or when your business is facing product development issues. Startup advisors can be extremely useful when a startup begins hiring key staff or needs to ramp up sales and partnerships.
What to look for in a startup advisor
Here are some considerations when searching for an advisor:
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Deep industry knowledge: They should know their industry inside out and be able to provide subject matter expertise you don’t have.
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Strong reputation: When recruiting advisors, check their referrals. Have they helped other successful startups in your industry?
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Great communicator and listener: Make sure they can communicate effectively with you and listen to your concerns.
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Willingness to challenge you: A great advisor is someone who can challenge you and push you out of your comfort zone.
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Availability: Are they willing to carve time out of their busy schedule to provide guidance and answer questions?
Where to find a startup advisor
When finding a startup advisor, you can leverage your network, attend networking events and conferences, or use online resources like LinkedIn.
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Networking events: Participate in meetups, demo days, and industry-specific gatherings to meet potential advisors.
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Partnerships: Collaborate with business partners, customers, or suppliers can lead to valuable introductions.
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Online communities: Engage in online platforms where industry experts and entrepreneurs interact and share knowledge.
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Mentorship platforms: Join platforms that connect small businesses with experienced advisors in tech and business.
Startup advisory agreement
It’s important to draft an agreement that specifies the duration, duties, and responsibilities of the advisor. This agreement helps ensure both parties are on the same page and can help avoid any misunderstandings down the line.
Carta's free startup advisory agreement template from the team at premier global law firm Wilson Sonsini includes all the necessary details like:
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The duration of the advisory relationship
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The advisor’s duties and responsibilities
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The equity compensation, advisory shares, or other compensation they’ll receive
Startup advisor compensation
Startup advisors are usually compensated with equity in your startup. How much equity they receive depends on your advisor’s value, level of involvement (full-time vs. part-time), and your company’s maturity or valuation. Learn more about how to compensate a startup advisor here, including equity types, vesting schedules, and other important considerations in our advisory shares guide.
