If there's one startup advice that gets thrown around a lot, particularly in Silicon Valley and its ocean of startups, it's this: 'fail fast, fail often". On the surface, this seems like sound advice. Failing isn't necessarily bad. However, the real intention of this advice often gets lost in this crazy obsession of "getting things done." Founders focus on the short-term and often at the expense of careful planning. We all agree that startup founders need to be thick-skinned and open to failure to learn from their mistakes and grow from those experiences. But what if you could bypass that step entirely? To do that efficiently, probably the most valuable asset you can have on your side is a startup advisor's experience. However, if you wish to make it work, the key is to get them to invest in your startup from the get-go.
Look For An Advisor Just Like You Would A Co-Founder
Startup advisors are not your mentors, they're not your employees, and they're not your coaches either. They're people just like you, just some years ahead in the game. These are people who've stood exactly where you now stand. They've seen what works and what doesn't, and their valuable insight and experience can ultimately help you avoid the mistakes and choose a path that gets you closer to success quicker. Therefore, having the right advisors is critical for your startup. It reduces the friction that you experience during the early days of getting your business off the ground. More so, it provides you access to a variety of advice and a fresh perspective that lets you view problems from different angles and tackle them effectively. However, not all startup advisors are created equal. Sometimes, the advice you get won't apply to your business dynamics at all.
The right startup advisors are people who are 3-5 years ahead of you in the same domain. And good startup advice should complement the knowledge you already have as a founder. Don't go for someone whose expertise looks good on paper. Search for your startup advisor like you would be a co-founder. Are they good at providing tactical, strategic advice and filtering out problems and prioritizing? Do they complement your strengths as a founder and minimize your weaknesses?
And most importantly, are they good at the art of advising? A lot of entrepreneurs complain about un-responsive advisors. CEO of Pebble, Eric Migicovsky, has a perfect solution for that: startup advisor compensation. He suggests that he makes his advisors work for a quarter of percent equity in return for their valuable insights. This approach effectively makes sure your advisors have "skin in the game" of your startup and align their efforts to help you on your journey as a new founder.
Shift The Equation: Get Advisors To Invest From The Get-Go
Founders often overlook a very critical aspect when networking and forming relationships with startup advisors. They forget that their advisors have commitments and priorities to their own business, and personal lives. That is not to say that a startup's business advisor won't care about your company or not make an effort to help if they're engaged with you. It's merely a question of how well their time-management skills are, and how far they're willing to go to make sure they're available whenever you need them. A great way to tackle this problem is to shift the equation as a whole. Make it necessary for all startup advisors to invest. This way, you can quickly eliminate candidates who are simply in it to collect company shares. Moreover, it can also help your startup meet KIP's more effectively.
Bypass The Investor Spectator Mode
By getting startup advisors to invest, you instantly ensure that they become active participants in your company. Therefore, with financial investment, advisors no longer remain passive spectators. Instead, they become active shareholders within the company and therefore have more reason to care for how the company performs in the long-run. Additionally, financial investment also allows advisors to see a clearer picture of how the company's finances are being managed and allocated. Ultimately, as a founder, you get more engagement and genuine feedback that would otherwise have not been guaranteed.
The Investor/Advisor Domino Effect
When a startup advisor invests in your company, it sets off a domino effect - a chain reaction of sorts. Advisors who invest instantly help build credibility for that startup and attract more investors and suitable advisors in the process. An announcement of an advisor's investment automatically signifies confidence that helps kick off this domino effect and makes the startup "hot" in respective networks. During the early stages of your startup journey, building that credibility and authenticity are incredibly hard. Startup advisors who invest in your company can help jumpstart your startup and help you attract more opportunities you'd otherwise have difficulty accessing.
Startup Advisor Who Invest Become More Than Just Advisors
Startup advisors who roll up their sleeves and genuinely help and contribute to your business's growth can make a substantial positive difference to your entrepreneurship journey's overall trajectory. And more often than not, these startup advisors are unidirectional and are usually willing to consummate the advisor-founder relationship with an equity grant during the early stages of the agreement. Think of it this way, if an advisor isn't ready to shed some financial skin for your company, would they have the incentive to be around for the long, challenging ride that awaits you and your business ahead? And that isn't to say that an advisor-founder relationship only boils down to financial commitments alone; the relationship is far more complicated than that. Ideally, it should be dynamic and flexible, where your advisor should show a natural willingness, enthusiasm, and genuine interest in how your company plans to operate and function.
From your first partnership with startup advisors, the simple act of getting them to invest can eventually get them to contribute to your company culture and values and help refine them to make your vision as the founder clearer in the long run. Advisors who invest in startups tend to get selective on who is brought in to give founders business-critical advice. Eventually, this creates a network of people that share the same vision for the company. Ultimately, this can help your company and team work as a unit and reach goals more efficiently.
Put Their Money Where Their Mouth Is
This one's pretty straight-forward to understand. Advisors who invest in startups actualize their advice by allocating their investment in the right way, using the right tactics. They're more willing to go above and beyond to help you manage business activities as an advisor to your startup company. Moreover, founders who partner with advisors (who end up becoming investors) tend to get significant leverage by the advisors' conscious choice of recruitment, planning, and budget allocation. And you'd be surprised how far they'd be willing to go to help your company grow, simply because they've put their eggs in your basket. Most advisors who invest in startups take up some portion of the work themselves and bring certainty to the startup's core business objectives and eventually reaffirm their values.
Unlimited Access To the “Golden fleece” Of Investors & Startup Advice
We talked about the domino effect earlier, and this applies to almost all kinds of resources that startup advisors bring with themselves when they partner with you. From their experience, advice, and invaluable insight on how to run a startup to their broad network of investors and other experts in the industry, startup advisors can instantly provide you access to a “Golden fleece” of resources that could help your startup thrive. As a founder, you get to take advantage of their vast network. Moreover, both investment and good advice becomes more readily available alongside mentorship.
As unpopular as this statement might be: having an excellent advisory network is as crucial as capital for startups. As a founder, your job is to make sure you secure your company's growth no matter what it takes, and finding the right advisors is probably the best thing you can do for your startup during the early stages. You see, good startup advisors can provide you with a solid foundation for your company to grow upon and allow you to make better decisions by gaining insight from their professional experiences. And a great way to further establish this relationship is to get your startup advisors to invest in your company. Startups who end up getting investment from their advisors get a unique edge over the competition - potential or otherwise; experience accelerated growth and stability - the kind that can mean all the difference between success and failure of any startup.