All advisor relationships are not created equal
If you’re like most of the startups I’ve worked with for the past 20 years, you have an advisor or two helping you out. You recruited someone who you thought could help, or someone who you thought had a pedigree that would make your team look more impressive, or you got an advisor (temporary?) as part of your participation in an accelerator.
Some of you speak with your advisors weekly. Some less frequently or not at all. Some of you send occasional updates on the progress of your company to your advisors. Some don’t. Some of you have advisors that are actually engaged with you and your company. Some don’t.
Formal startup advisors, informal advisors, and fake advisors
Good advisors are a valuable resource. You may have selected them because they have a particular functional or market expertise. You may have selected them because they are well networked. You may have selected them because they’ve raised money or are an investor and can help you understand the fundraising landscape. The bottom line is that they bring some knowledge or connections to the table to help you be a more effective founder.
But time and time again, I see founders who treat advisor names like the sponsor decals on Nascar race cars. They try to collect founder names that we recognize, or people with titles that seem to carry some type of endorsement.
Where I see this most often is on fundraising pitch decks. At this point, when I see an impressive and credible advisor in the deck, I tend to question whether what the actual relationship is.
I don’t think that these founders are trying to be deceitful, per se, but I think that most know that they are not being entirely upfront. They think of it as “marketing”. But from my vantage, it’s no better than the person whose resume says “Attended Stanford” when the reality is that they attended an extension class at Stanford, or the person that claims to have an “exit” when their one person company got a small check for an asset or as a 1-person “aquihire”. My mom used to say that a misleading exaggeration is just one flavor of lie.
Founders need to understand that investors invest in people more than they do in companies. In particular they invest in people that they feel they can trust. If you start the investor relationship by trying to sell them on your “team”, but the team isn’t genuine and involved, then that investor relationship will never make it past due diligence.
What a coincidence. She’s my advisor too!
Recently, I was working with several startups on their pitch decks and was surprised to find the same woman listed as an advisor for 3 different companies in 3 very different sectors. All of the companies added her after brief conversations with the woman at a pitch or networking event. I wondered if she even knew that she was on those decks. I asked each of the founders to follow up with their advisors and make sure that they had permission to list all of their advisors on their decks. Not surprisingly, in each of the follow up meetings, all 3 founders removed her from their decks.
If you are wondering if this is more the exception than the rule, I don’t think it is. I was once at a pitch night and was happy to see a founder I had previously met on the agenda. I was less happy when he got to his Team slide and I saw my name and LinkedIn photo as one of his “advisors”. At best, it suggests that they don’t have any true advisors. At worst, it looks like a blatant misrepresentation.
The lies can go both ways….
It’s bad enough that some founders try to collect advisors like we’re Pokemon characters, but sometimes, advisors are trying to collect startup advisor titles as well.
It seems that collecting advisor titles on a LinkedIn profile helps with street cred. Yes, I know I have some of those, but I have regularly scheduled contact with all of the founders on my profile. When the relationship is no longer active, I list an end date. Some advisors I’ve run into like to “list them and leave them”. Some don’t ever speak with the founders they are “advising”.
It’s the founder’s job to leverage the advisor relationship
When I decide to work with a founder as an advisor we establish ground rules. One of those rules is that they have an agenda for every meeting. In particular, they should come to the meeting with a question or something that they need help with. The founders I work with are great about this. They understand that no request is out of bounds or embarrassing. Helping is part of what I am there for.
Since they are so good at setting agendas with me, I’m surprised when I discover that they don’t always ask their other advisors for help. One of the frequent surprises is when they have an “Angel Investor” as an advisor in their deck and I ask if the Angel has invested or plans to and the founder says: “I didn’t ask”. When you are a startup founder who is raising money, you can’t be shy about asking for help.
When a founder says that they didn’t ask their advisor to invest, I follow up by asking if they asked their angel/advisor if they knew anyone else that might be interested in investing. Again, I get shocked when the founder says “no”. If your investor is invested in your success, engaged with you personally, and has equity in your venture, why wouldn’t you ask them for warm introductions to investors? More importantly, why wouldn’t they want to make the introductions?
Are you getting honest feedback about your Startup?
The flip side of this is when a founder does ask for introductions and the advisor gives some lame reason why they can’t make introductions at the moment. With all due respect, that’s crap. In the networked tech world, you can develop a great reputation by referring good investments to investors. If you have asked your advisor for the names of potential investors or for warm introductions, and they say anything other than “I’d be happy to”, they think that your venture isn’t ready for prime time. They think that referring you would not reflect well on their reputation.
Hopefully you have the sort of relationship with that advisor that you can honestly ask what it is about you or your company that’s keeping them from referring you to their network. There will always be an answer. Dig until you find it. You need to because you don’t want an advisor that doesn’t believe in your prospects and hasn’t been giving you feedback on the things you need to improve.
Any good advisor will tell you why they can’t refer you yet and the reasons are usually not that complicated: “You don’t have enough traction yet”, “You need to add a critical skill set to your team”, “You need to validate the pain point with customers”, etc. If you don’t know how to address some of those, one of your advisors should be able to help.
You should have advisors, but only the ones that are truly engaged
I mentioned at the outset that good advisors are valuable. Great advisors are engaged. In a good advisor relationship you have an explicit agreement with them about how they are helping, what their affiliation is, and how and where you can use their name.
Great advisors are honest with you. They give you their honest opinion. They are not cheerleaders. They are not your boss. They want to see you succeed and will do what they can to help. They will be honest even when they think that it is not what you want to hear.
If you have advisors for your startup, my advice is:
- Have an actual objective in mind for them and share that with the advisor.
- Have regular meetings and have an agenda.
- Ask them hard questions and expect constructive criticism.
- Give them equity and align your goals. There are standard advisor equity agreements.
- Don’t use advisors as window dressing. Especially in your pitch decks. You either have a relationship or you don’t.
- Don’t keep them “affiliated” with you forever. They are your advisors while they are actively advising.
- Don’t be afraid to ask them to leverage their network on your behalf.
Your advisors should be a fully utilized asset. Having the right advisors should save you time and help you avoid typical mistakes. Having fake advisors doesn’t have any positive value and can hurt your street cred in the long run.
Originally posted on LinkedIn