Investor Alicia Syrett is the Founder/CEO of Pantegrion Capital, a seed and early stage investment firm. She serves on the Board of New York Angels and as an Instructor in Steve Blank's Lean Launchpad course at Columbia University. She's vocal in her support of women-lead emerging tech companies --- mentoring and guiding them on how to grow and scale as well as finding ways to connect them to the people (mentors, investors, media) who can make all the difference in their growth trajectory. Alicia's latest effort focuses on startup advisory boards: Point 25 Initiative launching in June matches women-led companies with prospective advisors for their advisory boards. The 'Point 25' name of this initiative comes from the equity incentive of 0.25% that an advisor typically receives as compensation for being on a startup's advisory board. The initiative is grounded in the belief that while money does play a large part in determining the success of early stage companies, it is not the only success factor and having the right network of experienced advisors can really propel a business forward.

1) What are Advisory Boards needed? What is their prime purpose?

Advisory Boards consist of a group of individuals selected by the entrepreneur who provide advice and help the company succeed. They are separate from a formal Board of Advisors. Entrepreneurs can select advisors based on needed skills or voids to fill within their company. For example, an entrepreneur could add a lawyer for additional legal advice, a public relations specialist for branding or marketing advice, a former entrepreneur for advice on growing a company and selling to an acquirer, an industry specialist (e.g. consumer, fintech, etc.) for depth of knowledge and/or partnership development, and/or an investor for fundraising advice.

2) Should advisory boards meet regularly or is an ad hoc 'contact as needed' approach to engaging them ok?

It's really up to the entrepreneur and advisor to decide what type of relationship works best for them. It's not necessarily a formal relationship with regular meetings like a Board of Directors, although it can be. The entrepreneur may want to work directly with some advisors or hold meetings with some or all of the advisors at once. Some advisors may prefer to interact at regular intervals with the entrepreneurs (e.g. 1 hour per month) while others may be open to be contacted as and when they are needed. The entrepreneur and advisor need to discuss the logistics of the relationship before working together as there is no one right way to structure a relationship.

3) When is having a strong, involved and vocal advisory board necessary (if at all)?

Having an active and vocal advisory board is necessary when the entrepreneur feels that it is beneficial to the company. It is up to the entrepreneur to manage the relationships by dialing up or dialing down the expectations of involvement depending on what they think is best for the company.

4) Some startups try to impress with big names in a deck. Any dangers in picking high profile, bold-faced names for an advisory board?

Having recognizable names on an advisory board can certainly capture the attention of potential investors in a pitch deck. That can be beneficial in generating interest as the investors will likely want to know more about why that advisor wanted to get involved and what they're contributing. If the advisor is truly committed to helping the entrepreneur and actively involved in advising, then it can show the confidence the advisor has in the entrepreneur and their business. However, if the investor digs further and it turns out that the advisor is an advisor in name-only (i.e. they are not contributing to the business), then it can reflect poorly on the entrepreneur if there is a perception that there is no substance in the relationship and/or the name is just added to the pitch deck for marketing purposes.

5) What does the selection of the advisory board tell you about the entrepreneur?

A diverse and helpful advisory board can demonstrate that the entrepreneur is adept at attracting influential people to make their business successful, i.e. they can sell themselves and their vision and that the advisors believe in them enough to want to be part of that journey by offering their very valuable time and network to further the business. It can also show that the entrepreneur is savvy enough to understand where the voids are in the business and that they know how to ask for help in filling them.

6) Should there be term limits for advisory board members?

It's up to the entrepreneur to determine the level of interaction and length of the relationship and to communicate these expectations to the advisor. Some contracts may be for a year and others may be for multiple years. It's up to the entrepreneur to potentially offer a renewal if the contract expires, depending on whether the advisor continues to be helpful at that stage of the company's growth.

7) How should prospective advisory board members assess opportunities?

Prospective advisory board members should first and foremost decide if they fundamentally believe in the entrepreneur and their vision for the company. They should be excited about the opportunity and ready, willing, and able to meet all the entrepreneur's expectations for the role by giving their time, access to their network, and strategic advice. Prospective advisors should understand the equity offered for the role: many positions are 0.25% of the company, but it can vary (e.g. 0.10%-2%) depending on the value the advisor can provide, their time committed to the role, and the length of the contract. They should understand the equity vesting schedule (e.g. monthly) and time of contract (e.g. 1 year, 3 years). They should also review the document from a legal perspective before signing.

8) You recently wrote a column on what entrepreneurs can ask of their advisors. Any other articles you'd recommend to startups (and prospective advisors) on advisory boards?

Yes. This article makes reference to compensation for advisory boards; and for structuring advisory boards, I'd suggest reading "How To Find And Leverage A Killer Advisory Board" and "How To Design And Operate A Winning Advisory Board".

Note: Applications are now open for the June 20, 22, 27, and 29 Point 25 Initiative events. The deadline for startups to apply is May 15.

Published on: Apr 13, 2017