Finding the Right Business Advisor Is A Superpower

Summary

For startups going global, tapping into the wisdom of well-connected advisors early on is invaluable. They assist with refining products, go-to-market strategies, and building narratives. Founders can find business advisors through warm introductions, executive search firms, or events hosted by VC firms. But vet their abilities before getting them on your team.

Building businesses is hard work. It gets tougher if you are a first-time founder, looking to build for a market you have not experienced or operated in, especially in the early stages. In a competitive market such as the US, you need to iterate quickly and move fast. However, if you have a few partners who can help you in this journey, it often makes a big difference in getting capitalised. It could fuel your next growth chapter. We have seen this play out very often and touched upon this briefly here, but this is a subject that merits a longer discussion. 

As a founder who is not native to the US market, it is important to surround yourself with a network of people who understand it. These people are your operating advisors. They help you navigate your market across several areas that you want to prioritise. Their key skill is their experience and network. 

These are folks who have built businesses in an area or segment for longer than your employees or board members. They do everything, from helping you identify the gaps in your product to speeding up your product iterations, from opening doors for initial proofs of concept to eventually helping you get to market faster. They rocket fuel your growth early on.

But why engage a business advisor when you can simply hire someone to do this job? The simple answer is affordability. At an early-stage company, it is prudent for founders to be frugal. Hiring someone with specialised expertise means spending a lot more than on a usual hire. Secondly, there may not be enough quality work to keep them engaged full-time. You need to spar with these folks, which may be a few hours a week.

Your board, which might have your first few investors as members, also does some of this work for you. They can help you grow by connecting you to their network and the right customers. Beyond that, you need specialised access. That is where advisors come in. 

‍

What kind of business advisors do you need?

The three core areas where advisors make things more efficient and relevant for your business in a new market are product, go-to-market (GTM), and narrative building. 

They can make you understand the existing market and its impending gaps and, in doing so, they open their network for customer conversations. And they aid in building the narrative of your product, too. They also open doors to potential customers and even help with closing sales leads. They assist in building the organisation by showing you ways it can be structured as you scale, interview people, and even help you close hires. Eventually, they empower you to build a community in the market and accelerate your GTM. Their role is, therefore, extremely relevant for an early-stage business.

We have seen this play out in many of our portfolio firms, such as Yellow.ai, GlobalFair, and Acceldata, to name a few, where we helped onboard advisors for various problem statements, such as opening doors to potential customers, hiring, product iterations, and narrative building.

There are three archetypes of advisors you could bring on board:

1. GTM or network builder - These are the people who open doors for your business. They will also help you in hiring your GTM team. 
2. Product iterator - They fulfil a more technical role and will be your product and technology advisors.
3. Narrative builder - These help you identify the gaps that exist in the market, what your product should be solving for, how to pitch it to potential customers, and customer segmentation.

‍

How to find the right business advisor?

As a founder, it is your job to propel the growth engines of your company. At the same time, it is also upon your shoulders to realise and admit when you may not have ready expertise in the firm to move fast, or if a part of the business is not pulling the amount of interest you thought it would. 

Founders often find that the required impetus may not be achievable with the talent they have internally, especially at the early stages. This is the time to bring in an advisor, who is an external persona, to help you solve the problem you are facing at your current stage.

An interesting example is the cyber asset attack surface management and governance platform JupiterOne. They onboard an advisor every few quarters and these advisors help them in all the areas we spoke about earlier. 

“Find folks who can get you warm introductions and make them your independent advisors.”

Now the question is, how do you find and engage these business advisors? Once you have identified the customer persona you want to sell to, you can make cold calls to CXOs in target customer companies. But this takes far too long to get a favourable response and ends up derailing your plans. The way to do this is through warm introductions. Find folks who can get you these and make them your independent advisors. One way of getting to these people is through your board. The other way is through executive search firms. They have vast networks with CXOs and their relationships are strong enough to bring these executives to the table.    

At Lightspeed, we have identified some of these firms in the US that are experts in building these advisor panels. We co-host events with them where we bring these advisors, our investment partners, as well as our founders under one roof for networking. The aim is to introduce these advisory experts to founders over thought leadership sessions. Founders get to talk about their products with the advisors operating in their space and segments as part of the sessions. Many go beyond the introduction, hold one-on-one conversations, and bring the advisor in. On other occasions, we have run focused searches to get them to the table. 

‍

Are you speaking to the right advisor?

Once the conversations with prospective advisors begin, it is important for the founder to keep focus and validate the strengths of the person and then re-validate their strengths through reference checks. If you are onboarding an advisor to introduce you to customers, then make sure they introduce you to customers who they have socialised with other founders in the past. The tactical reason for this is simple: these customers are in the advisor’s network and these customers will help you get access to other advisors who you may need in the future.

Ask yourself and the market a few basic questions: 

• Has this person been an advisor to an early-stage business before? Will they get their hands dirty?
• Do their strengths solve for all your requirements at your current stage? Does a particular advisor bring the expertise to shorten the journey to success, which may be getting to the next stage? From $1 million ARR to $10 million ARR.
• Make sure to validate the depth of the network. Does the advisor know the right people or decision-makers relevant to your business? 

Once you have the answers to these questions, get down to clearly defining the scope of the engagement. 

An example of a well-defined scope is bringing in an advisor to accelerate the GTM in the mid-market. Another is introducing a company to design partners to help validate its positioning. 

Look beyond their biodata. Merely being associated with a big brand does not make a good advisor. They need to be able to provide the right value for the founder. 

For example, you could bring in an ex-CEO of a big tech enterprise, but your product is aligned to the mid-market or a bottom-up motion. This will be a complete mismatch because the person will most likely not have access to your market segment. 

‍

‍

How to compensate business advisors?

Now that you have found the advisor you think you need, and they have agreed to come on board, you need to work on their compensation. This is closely linked to the expectations you have from this person and the work you want them to do. Which is why defining the scope of engagement is important. 

Given below is an indicative chart of how advisor compensation is structured.

‍

We touched upon this briefly when we spoke about compensation, and the importance of equity for this and other roles. 

There are two important things to keep in mind while deciding compensation for advisors: 

1. Before finalising this compensation structure, work with the advisor for a quarter or two. Take this time to figure out your equation with them, and if you can get the right value from them. 
2. While equity is important, we advise our founders to give their advisors the ability to buy equity in the business. This way, they are aligned with your success instead of merely spending a few hours with you as part of their engagement. 

Business advisors generally stay on for 12-24 months. Advisory contracts are generally structured for two years. 

‍