For serious entrepreneurs, one major component for making it past the incubator stage is the ability to gather a solid group of advisors. Often, these advisors become investors or board members. While at times the advice may not seem to align with your vision, it could be critical to help you achieve your long-term goals.
The startups we see at Bootcamp Ventures, our startup advisory firm, are actively seeking and receiving advice. As a company moves through its life cycle, the value of advice from different sources often varies. What follows is a quick rundown of which types of advisers are best for which stage of your company.
Seed: At the outset, your best bet could actually be your friends. Enlist them as your early adopters if possible. Often, the closer the friend, the more honest the advice. Bear in mind also that most people don't have an entrepreneurial mindset, and you may be more comfortable with higher levels of risk than the salaried employees you may know.
Post-seed/incubator: If you're at an incubator, consider the backgrounds of the advisors before settling on mentors. Choose those best suited to your industry. Are they experienced entrepreneurs who will understand where you are coming from and be able to give the most relevant advice? If the advisor is from a venture-capital firm, does it have portfolio companies in your niche which could be tapped?
Round A funding: If you're beyond the "3F" (friends-family-and-fools) investment stage and seeking about $500,000 -- at the low end of a Round A funding, you may get your best advice now from an experienced "super angel" in your field. Alternatively, you may seek out, if suitable, a business accelerator or an "off the radar" fund. These funding sources are the first real partners for your enterprise, and their interests are generally aligned with yours. But research their backgrounds and check references thoroughly. Don't get excited by promises and discussions of big exits.
Round B funding: At this stage, you've reached the milestones of your Round A plan and are in growth mode, on your way to market leadership. Your most relevant advisors now will likely be professionals related to your field, including attorneys specializing in corporate law and established advisory firms with a global network of contacts.
The four "W"s below are useful tools, which will guide you through the startup life cycle and help you take and implement the right advice at the right time.
Who: Choose your advisors according to their expertise, and consult with them about topics related to this area only. Have they been through a startup? What is their risk tolerance? How well do they understand your situation and goals? Beware of unsolicited advice from friends and family who have no expertise or experience with the issues.
Why: Get in the habit of putting yourself in the shoes of your advisors to understand where they are coming from. Are they trying to persuade you of something, when the benefit to you isn't as clear as the benefit to them? The more you know about your advisors, the better prepared you'll be to evaluate their advice and instructions.
What: Before acting on the advice, stop to consider at what cost can it be implemented? What are the benefits of following it? Does the "upside" balance the total cost? Cost should be calculated in terms of money, resources and time. Hash out the issues with your team.
When: Once you have decided to take advice, think about the timing. Consider the stage of your company. Is it ready to follow through on changes related to investment, management or relocation? Is your research-and-development or your public-relations team briefed and ready for action? After you have made sure your whole team is prepared, then you can move ahead and implement the advice.
As an entrepreneur, your strengths include your fearlessness and perseverance to do what it takes to succeed. With this in mind, take the time to consider the source of the advice and whether it should be taken with a grain of salt. Ultimately, you are your most important advisor when it comes to the decisions that determine your success.
Ed Frank is co-founder of Bootcamp Ventures, an advisory and training firm based in Tel Aviv, Israel, with offices and affiliates in the U.S. and Turkey.