Why Every Startup Should Consider Creating an Advisory Board Early On

I firmly believe that a strong and effective board can play an important role in the success of any startup.

Established organisations almost always benefit from having a reputable board. Regardless of the stage in which the company is situated in its development, all organisations, even emerging startups, should set up an advisory board.

A board of advisors can guide the founders and help them make important business decisions. A board is also a meaningful signal given to outsiders such as potential investors, clients, and employees. The founders are likely to be perceived as serious, ambitious business owners supported by a strong team. This aspect is especially critical when seeking capital to grow the business. Investors, especially angels and venture capitalists, will interpret the establishment of a board as a sign of the founders’ maturity and willingness to listen to advice – a key consideration for a successful investor-entrepreneur relationship.

In their early days, companies typically don’t have enough money to hire excellent professional advisors (M&A, financiers, consultants, bankers, accountants, lawyers, tax advisors, head hunters, etc.). Startups can face difficulties attracting experienced mentors or senior advisors. Consequently, crucial elements may be overlooked.

A board of advisors provides professional guidance on multiple key business issues during the startup phase and also afterwards. Any board should include core professionals (finance, law, accounting, marketing/sales, HR) as well as industry specialists.

What makes a successful board member? How do I recruit and select board members? How should I remunerate board members? For clues to answering these questions, the links below should provide you with a good starting point.

If you still need to be convinced of the benefits of having a board of advisors, I highly suggest that you watch the video below. It is an excellent case study. Ty Danco is a former investment banker, Olympic athlete, angel investor (in the U.S. and Quebec), blogger and entrepreneur. He is highly experienced and has an intimate knowledge of startups. Ty talks about how the right advisory board not only provides insight and guidance, but can also provide the credibility needed to launch a business. I couldn’t agree more.

Ty Danco – Leveraging Your Advisory Board – Must watch.

Roles & Responsibilities of Boards

http://www.smallbusinessnotes.com/managing-your-business/board-of-directors.html

Traits of the Best CEOs: Building a Highly Effective, Value-Adding Board of Directors

http://blog.openviewpartners.com/traits-of-the-best-ceos-building-a-highly-effective-value-adding-board-of-directors/

Business Growth Strategies… Have You Looked At Your Board Composition?

http://blog.openviewpartners.com/business-growth-strategies-have-you-looked-at-your-board-composition/

How to Recruit a Board of Directors

http://blog.openviewpartners.com/how-to-recruit-a-board-of-directors/

Advertisements

About Ludovic Dumas

Ludovic transforms innovative companies into world-class organizations. He is an investment professional at an investment firm representing the interests of one of the most successful families in Canadian business. Before joining the private equity world, Ludovic was an investment banker at CIBC and with ING Group’s investment banking team in Frankfurt, Germany. Mr. Dumas was also a management consultant with Deloitte where he worked on corporate strategy, restructuring, market analysis, due diligence, and economic development mandates. Specialties Mergers & acquisitions, capital raise, corporate strategy, entrepreneurship.
This entry was posted in Entrepreneurship and tagged , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s