Startup advisors: how to choose, compensate and work with them

Advisor, mentor, expert or co-founder: what is the difference?

These roles are often mixed up, yet they involve neither the same commitment nor the same compensation. Telling them apart from the outset stops you from promising equity to someone who only gives occasional advice.

When does a startup need advisors?

There is no universal right moment. An advisor makes sense when a specific need appears that the team cannot cover alone.

• Entering a regulated or highly specialised market, such as health, finance or energy.
• Preparing a first funding round with no experience of investors.
• Building a sales team or a pricing strategy.
• Opening doors to large accounts or industrial partners.
• Making a major technical decision, such as an architecture or infrastructure choice.

Before your first customer, one or two well-chosen advisors are plenty. A formal advisory board mostly makes sense once the company grows and several topics need following over time.

How do you choose a good advisor?

A prestigious name on your website is worthless if the person has neither the time nor the wish to help you. Look first for experience that matches the problem you face right now.

• ✓They have already solved the problem you are dealing with, in practice.
• ✓They have time and commit to realistic availability.
• ✓Their advice fits your values and the way you work.
• ✓They have no conflict of interest with a competitor or customer.
• ✓You have tested the relationship over one or two conversations before formalising it.

Good places to look include the programmes described in our guide to incubators and accelerators, the schools, incubators and founder networks on our partners page, and the business angels and funds in our investors area, many of whom advise the founders they meet. For a one-off assignment, the experts directory lets you call on a specific skill.

What should you offer an advisor in return?

Compensation depends on the involvement you expect and the value the advisor brings. Several options exist and they can be combined.

• Voluntary help, common for mentors and for advisors who want to support the ecosystem.
• Fees or payment per assignment, suited to a limited and clearly defined need.
• A small equity stake, kept for advisors who are genuinely committed over time.

If you offer equity, choose the instrument carefully. In France, BSPCE are in principle reserved for employees and certain officers, so an outside advisor more often receives share warrants (BSA) whose price and terms should be set with a lawyer or accountant. Other countries have their own schemes, so get local advice.

What should an advisor agreement include?

Even with an unpaid advisor, a written document clarifies expectations and protects the company. It can be short but should cover a few essentials.

1. 1Describe the scope: topics covered, any deliverables and expected availability, for example one meeting a month.
2. 2Set a limited term, often renewable, and the conditions for ending early.
3. 3Include a confidentiality clause covering the information shared.
4. 4State that work and ideas produced during the engagement belong to the company.
5. 5Write down the compensation and, where relevant, the vesting schedule.
6. 6List the conflicts of interest to disclose and how the advisor’s name may be used.