Does your startup need an advisory board? The answer from a panel on the topic at the most recent Ynext Incubator Bootcamp would likely be an emphatic “Yes!” Joining us to educate our current cohort of fintech startups on the why’s and how’s of building an advisory board were the following rock star panelists:
- Kathryn White, RBS
- Jessie Dennen, Percena
- Johanna Maska, Karmic Labs
- Maly Ly, Float
- Jennifer Anderson, Lending Club
The panel emphasized that advisory boards are not just for window dressing as you’re courting prospective investors. The right advisors can bring more than a gold nameplate to the table. They can bring experience, perspective, second opinions, connections and complementary skills that the founding team may be lacking. For example, Ynext mentor Jessie Dennen recalled her experience in her first job at Napster.
The founders were barely out of college and soon found themselves embroiled in a legal dispute with the Recording Industry Association of America. “We needed to find ‘adults,’” she said, to help the company navigate the legal minefield and re-emerge as a viable business. So, if you agree that having an advisory board is a good idea, how do you go about forming one? It helps to know that there are a lot of people willing and even eager to serve in an advisory capacity, and who would welcome an invitation from a startup with a compelling proposition.
The panel offered a few guidelines for making sure you have a good fit. First, identify where you may need help. If, for example, your founders are engineers, you might want to find advisors who have strengths in marketing and business development. If you expect to market through the bank channel, find people who know how banks operate and what they’re looking for. If you’re going into the investment arena, perhaps find advisors who understand that regulatory environment. Kathryn White of RBS recommends building diversity into your advisory board, noting that most successful companies have a diverse group of advisors.
The builders of a product don’t always have the perspective of the actual users, so diverse viewpoints can be helpful. Recruiting advisors calls for fearlessly working all your connections and scouring sources such as LinkedIn for candidates. Dennen recalled reading a profile of a woman in TechCrunch who sounded like she’d be a perfect advisor, and she simply contacted her directly. An event or open house is another way to attract people. Napster held events that routinely outdrew the capacity of their venues, Dennen recalled. Once you start connecting with people, give them compelling reasons to be a part of your enterprise.
Explain not only what you are doing, but why you are building your company. Find out what motivates them. Ask them to play specific roles – not just “We’re looking for advisors,” but “We’re looking for someone who can help us with finance.” Once you have enlisted a strong advisory board, communication is paramount. Stay on their radar – and not just when you have a problem. Keep them informed and involved so they will recognize opportunities for you. They want to contribute. Bear in mind advisors are not looking to take control from you; they’re there to help you make smart decisions. Should advisors be expected to invest in your venture, even a small amount?
The consensus of this panel was that is more important for advisors to bring expertise that you’re not yet in a position to hire for, and that expecting them to bring capital as well might limit the candidate pool. The most important thing is to find people who truly believe in your mission.