There are various types of advisors with differing skill sets and motivations. The key is to work with Advisors that have skill sets that help solve your company’s current and near-term problems. Here is a fractional categorization of the various types of Advisors Startups usually encounter in the Venture community.
- these are the inquisitive minds we find in Academia. They are our professors, faculty advisors, and fellow students. They ponder the proverbial "What if’s?" and "Why not’s?" that are responsible for much innovation. They are best utilized during the product/service development, design, and testing cycles. They handle the most onerous technical details well, but may not be suitable for ideation related to revenue models and monetization.
- VC firm Associates can be tremendously helpful in pointing out the "third rails" or specific areas in need of improvement such as corporate governance, accounting, IP, employment contracts, founder agreements, etc. that act as impediments to VC funding. Associates can be instrumental in making critical introductions and giving Founders a sense of market analysis from the VC perspective.
The Idea Guys/Gals
- often in the development of early stage companies the first idea or product/service leads to an even better series of radically different products/services. It is worthwhile for startup founders to engage frequently with hyper creative types who possess unique perspectives and extremely innovative ideas. Idea people have very agile minds. They often make unusual theoretical judgments and technological juxtapositions that result in unique mashups of new and existing products/services.
The Serial Entrepreneurs
- the importance of culling folks that have "been there and done that" can not be underestimated. Many former entrepreneurs in a post-climactic phase after exiting a company or investment are very anxious to find "the next thing." Their proven track records and established networks can lend an air of credibility to your company and open up multiple funding options.
The Walking Rolodexes
- the world is full of opportunists with huge networks who work as consultants or investment brokers in many late stage deals (brokers are taboo for early stage companies). They know everyone you will ever need to know in your life as an entrepreneur. If you are an early stage company founder, these persons are often difficult to deal with since they are usually interested in cash not illiquid stock. However, it is necessary to seek them out since maintaining alliances with well-connected persons is a key element in the growth of your company.
The VC Partner/Angel Investor
- this is the best Angel investor and Advisor an entrepreneur can have. Along with a highly developed network and sophisticated knowledge of sourcing/structuring deals, many VC’s are best at advising/mentoring entrepreneurs. They have great interpersonal skills and unusually accurate "bullshit detectors" that can help startups avoid unnecessary difficulties.
The key is to try to get at least one Advisor from each category to round out your Advisory Board, then add additional Advisors to the mix as needed.
One overlooked factor in Advisor/Startup relationships is compatibility. Startups should work with Advisors that share their communication styles, work ethics, interests, and curiosities. It is extremely important to work with people you like and respect. Founders should never choose an Advisor that they do not like. Moreover, all Founders have to be convinced unequivocally that the prospective Advisor can make a substantial contribution to the company.