You’ve closed on the financing from outside investors and the money is in the bank. Now you have to continue building upon the partnership you’ve developed with your investors to execute on the business plan you presented to them. Make sure that you develop a good working relationship with your investors so that you have a partner through both good and challenging times you will face as you execute on your business plan and scale your business. Early-stage companies also tend to be strapped for resources. Establishing an advisory board is one way to bring expertise to the organization.
A good investor should spend a significant amount of time in the first three to four months of the investment with company management. Take this opportunity to bounce ideas, strategies and execution plans off them. You targeted certain investors not only because they had money, but because they are networked and connected in the industry. Work out a plan to tap into their contacts to access customers, potential employees, partners, suppliers and advisors. The goal is to build a strong, collaborative working relationship built on trust.
Early-stage companies tend to have a small management team and a small board of directors. Additional outside assistance can be addressed by creating an advisory board. An advisory board provides guidance and advice to management, but does not have decision-making powers or management responsibilities. These members may be future customers, partners, industry contacts and potential board members. Their affiliation with your company can also add credibility to your organization. Your company may have one general advisory board or several specialized advisory board (for example, marketing, technical, financing, scientific).
Some early-stage companies may not qualify for Directors& Officers (D&O) insurance and therefore may not be able to recruit independent members to their board of directors. Advisory boards offer an alternative way to get these valuable external people contributing to your organization.
Kawasaki, G. (2004). The Art of the Start: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything. Toronto: Penguin Canada.