Neil Patel

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What do you need to know about startup advisors before you launch and to get to the next level?

Startup advisors can make a huge difference in your venture. Though there can be a substantial difference in the outcome or bringing them in based on a variety of factors.

Here’s what to know and how to get the most out of this opportunity.

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The Ultimate Guide To Pitch Decks

The Value of Startup Advisors

The right startup advisors can pack in a lot of value. You’re going to need them. 

This is a tremendous opportunity to leverage expertise as you get started and grow your company. There is a whole lot you’ll need to learn and master as you begin and scale-up.

You may be the best talent in your industry. You may have two co-founders who really know their domains. Yet, there are many roles to take care of. Advisors can bring incredible experience in a much more efficient way than just hiring. 

Startup advisors can add a lot of credibilities when it comes to winning key customers, getting into powerful distribution channels and fundraising.

They can round out the gaps in your founding team, and make it much more attractive for investors to get involved. According to Medium’s most popular startup column, those with advisors raise 7x more money and enjoy 3.5x more user growth.

There Are Many Kinds Of Startup Advisors

There are many different ways startup advisors can help. Some will be more active. Some will be on your pitch deck and website more to add credibility and trust. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted. Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here).

Leadership and executive coaches can really help you grow as a leader. If you’re going from zero to 100 to 1,000 employees and managing hundreds of millions of dollars you’ll have to grow fast.

They can also help give you the 30,000-foot view of growing your business, and their experience and insights of what really works and how to champion common challenges from what they see in the whole market.

Fundraising consultants can help you with the right strategy, materials, and connections to raise funds well from the best investors. 

On the other hand, a good M&A advisor can help prepare you for and navigate the process of mergers and acquisitions. They can help you grow by acquiring other companies, and strategically position your business to be acquired, as well and negotiating and getting through the due diligence process.

How Startup Advisors Get Paid

Quality startup advisors can be extremely valuable. Their time is very valuable. They have to be very careful about who they tie their names to. 

You may find some informal mentors who are willing to donate some time to help you. Though most formal advisors will be compensated in some way.

Depending on their exact role and if they will be involved on a regular basis helping with specific tasks, this may be some form of a paycheck. Others will take specific set fees for specific tasks, like fundraising and M&A transactions.

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The most common way to compensate advisors who are not doing work for you is equity. This may be a very small percentage, depending on how much value they will add. This can be one of the most efficient ways for early-stage startups to get great help without forking out precious cash. 

The Caveat

Even the best startup advisors can’t help if you don’t let them. Startup advisors are not there to just tell you what to do and be your boss. If you have multiple advisors they may even have different opinions.

They provide the benefit of their experience. It is up to you to integrate their recommendations. You can pick and choose, but do keep in mind that they can only help to the extent that you let them and implement their suggestions.

Many highly successful entrepreneurs talk about the value of going with your gut. Yet, if you are bringing in an advisor who has proven to get the results you want, then it’s worth listening and acting on it, even if you don’t necessarily get the reasons for their directions 100%.

How To Choose The Right Startup Advisors

A great startup advisor will pay back many times what you invest in their help. What you don’t want is deadweight that you may have on your cap table, that isn’t adding any tangible benefit.

Start by knowing who you really want and need on your advisory board. Do you need specific help with fundraising and M&A? Do you really need help with advice in a certain area of logistics for your business? Do you just want a celebrity startup advisor who can make your startup look like a better bet?

What areas of your business are your founding team weak in? Savvy investors know that it takes both engineering expertise and the ability to execute to build a successful business.

So, do you have the domain and product expertise, as well as the business acumen, and marketing ability to generate real revenues and profit? If you’re heavy on the tech background, do you have someone who has strong experience within the industry you are trying to disrupt and improve?

Which startup advisor will best align with your brand and help the most? How may they help attract certain other investors in the future, or turn them off?

Make a shortlist, and reach out. Then get to know their motivations before bringing them on board. What’s in it for them?

Are they just looking to take a piece of as many startups as they can with the hopes that one or two will create big wins for their personal wealth?

Is taking compensation for sitting on advisory boards or lending their name just a business for them? Or are they simply passionate about giving back and helping other entrepreneurs after having sold their own company?

Ask yourself the right questions and really understand what drives them as well as their agenda to make sure it aligns with your goals.

In the video below I cover in detail how to create your advisory board or board of directors.


Hello, everyone. This is Alejandro Cremades, and today we’re going to be talking about how to create your advisory board or board of directors. Let’s face it: the way that you surround yourself, the advisors that you bring to the table, the board of directors are those directors sitting on the board that are helping with guiding the strategy and the execution of the business. Ultimately, those are going to be critical and part of the foundational pieces of any successful business. So, with that being said, let’s get into it.

When it comes down to what is a board, you’re going to have the two different types of boards. You’re going to have the board of directors on one end, and then you’re going to have the advisory board on the other end. Typically, the board of directors is comprised of either the founders or the CEO and also the investors that have invested in the different rounds of financing in that business.

Also, they may have some independent board members, and those are people that are agreed upon between the investors and the founders or the CEO to bring to the table and guide the strategy. The board of directors is ultimately accountable for guiding the strategy of the business, and they have a fiduciary duty to the investors.

On the other end, the advisory board doesn’t have any type of fiduciary duty, it’s basically providing guidance either to the executive team or to the CEO or to the founders, and that could be guidance on any type of domain that could be needed for the execution of the business, for example, marketing, internal processes, and fundraising. So there are different types of advisors. 

That’s essentially the main difference. On the board of directors, there is a voice, and there is a vote. On the advisory board, there’s no voice, no vote, and no fiduciary duty. There’s just guidance that is provided.

In terms of who chooses the board members, those are ultimately chosen by the executive team, the founding team, or the founder. When you’re raising the money, you’re going to be choosing from whom you’re raising the money and those people that are going to ask for a seat on the board. 

Then, it depends, obviously, on your stage. On a seed stage, there are going to be three board seats: the founder and the other two investors that are coming, or two founders and the investor that is coming in.

On a Series A, which is the next financial cycle, there are going to be about five board members. That will be two founders: one is the CEO, and one is the non-CEO. Then, the other two investors that have invested on the seed round and on the Series A, plus an independent board member. Then as you continue to scale, and you do Series B and up, you’re going to see the board going all the way up to nine board seats.

In terms of why you want a board of advisers: it’s not critical, and it’s not essential to have that advisory board, but here’s the thing. You’re not going to know what to do. This could be a journey that you’re navigating for the first time. Maybe you already are familiar with the market and with the space, but maybe there are people who can help you with different things. You’re not going to know that already, so having people that have already been there and done that, that can provide you that guidance and that advice so that you can avoid mistakes and you can perform better is totally worth it. 

The advisory board is going to depend on who you need and what are the profiles that are needed with that type of a skill set or expertise, and you need to take a look at the 18-to-24-month roadmap and understand what is needed in order to achieve certain milestones. Then, depending on that, you’re going to have a clear understanding as to what are going to be some of those profiles that you’re going to need to bring on board to help you and to provide that strategic guidance.

When it comes to compensating the advisory board, the way that you’re compensating them is ultimately with stock. You’re going to be having them participating on the equity incentive plan, and in this case, you’re going to give them certain stock options where it depends on milestones or even you provide a vesting, which could be one year or two years where you’re setting up the expectations of what you’re going to require from these advisors. If that’s going to be one call every quarter, one meeting every month, whatever that is, it needs to be agreed upon, and those advisors are receiving in exchange stock for the advice and the strategic guidance that they are providing you and the business. 

As a startup, you want to carefully curate who you’re bringing in, whether it’s an advisor because they’re going to be associated with your business and carrying the flag, or a board member in the board of directors that could destroy their providing the right type of strategic expertise or guidance, or even fire you as the CEO or the founder of the business. So, you’ve got to be very, very careful about who you’re bringing in.

And I would love to hear from you on the comment section below who you’re thinking of in terms of advisors, what are the profiles that you think are going to be helpful. Also, Like this video if you enjoyed it, and don’t forget to subscribe to the channel, so you’re not missing out on the new videos that we’re rolling out every week.

Also, check out the fundraising training, which is the program where we help entrepreneurs all the way from A to Z with everything related to fundraising, live Q&As, templates, agreements, you name it, and also, a community of founders all over the world helping each other. I find that you would really get a tremendous amount of value from that, and there is nothing from just checking it out. Thank you so much for watching. 


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Neil Patel

I hope you enjoy reading this blog post.

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