I remember when I started my company I thought I needed a board of advisors. After all, every other startup company that I looked at had an impressive list of advisors on their website.
I thought, “this must be one of the keys to raising money. I’d better find my group of advisors.”
So, I started networking and arranging meetings with various University Professors that I thought would be great to have on my board of advisors. I had professors lined up from all the top universities that had expertise in analog circuit design (what my company would be doing).
I was really psyched to tell the partner at the VC fund I was working as an Entrepreneur in Residence (EIR) what I had accomplished. I walked into Dave’s office, full of pride and confidence. I said, “Look at the group of advisors I’ve lined up for my company.”
The value of an advisory board is significantly overstated.
Dave looked at me and said, “A company like yours doesn’t need an advisory board.”
“What? Why?” I said, dumbfounded. “I thought every startup needs an advisory board.”
“Where’d you get that from?” Dave asked me.
“Every company I looked at has an advisory board, so I thought we needed one,” I said lamely.
“No, we’re (VCs) on to that game,” Dave said. “It’s not going to help you.”
Don’t add advisors because you think they will help you get funding.
“Why is that?” I asked.
“We (Venture Capitalists) know that the real work is being done by you and your team, not an advisory board. In fact, most of the time you’re giving away equity for a name and not much else,” Dave said.
I nodded for him to continue.
“In other words, your advisors are just names!” Then Dave smiled and said, “And we know this. Maybe that strategy would work years ago, but not today.”
I thought for a bit before I responded. “You’re right,” I said. “Maybe they would have helped with recruiting some young engineers, and that would be worth something, but not much more.”
Only add an advisor if the advisor is truly going to add significant value.
One of the advantages I had as an EIR was watching how Crosslink, the VC fund I was an EIR at, made investment decisions. An advisory board was never a reason for deciding to invest in any startup they every invested in. Ever.
Dave was right. I stopped spending time on building an advisory board.
Interestingly enough, I did add two advisors. The first was Dave. When Dave left Crosslink (that’s another long story), I kept working with him.
I gave him founder’s shares in the company, and it was worth every share I gave him. I would have never been able to survive what was ahead of me without Dave’s help.
The second advisor was our only angel investor, Bob Dobkin. Bob was a legend in the analog IC world, and his investment did help open some doors.
However, more importantly, Bob was someone who’d built a company (Linear Technology) similar to the company we were trying to build. It was great being able to bounce ideas off someone who’d been where we wanted to go.
I didn't bring Dave and Bob on because I thought they would help us get funding. That was irrelevant. The reason I added Dave and Bob was because I felt they could help me.
And Dave and Bob did help me. That's the only reason you should ever add an advisors.