Latest from Sifted – How to hire advisers

How to hire advisers
2023-06-01
We dig into how to find good advisers, what to look for and how to pay them

How to hire advisers

Advisers are typically full-time operators or founders who advise startups on the side. They have expertise in a specific domain, be it marketing, sales or product. But unlike a mentor, an adviser is compensated for their advice — typically with equity.

Napala Pratini, cofounder of Habitual, a digital therapy app targeting obesity, has recruited several advisers while building her startup. In our Startup Life newsletter, she gave us her top tips for how to find advisers, what to look for and how to pay them.

Decide what kind of adviser you need — and for what

There are three categories of advisers in my book: 

  • There’s the brand-name adviser, who is an impressive name that you put on a pitch deck or website as a trust marker. 
  • There’s the connector, who you pay to essentially open up their network to you and make introductions — whether it’s for sales, partnerships or hiring. 
  • And the third is the WhatsApp adviser, a person who’s there as a sounding board, especially for first-time founders. 

It’s important to first analyse what you require this adviser for, whether it’s to launch a new product or hire your first executives, and the extent of the commitment you require from them. A face on a pitch deck or someone you email for connections on a once-a-month basis is different to WhatsApping an adviser a few times a week for help. 

Find advisers in companies you admire

Think about who you look up to in your industry — whether it’s for their branding or a specific product they’ve launched — and reach out to them. 

Ensure this company is not a competitor in terms of product or geography, but is in a tangential space. We reached out via LinkedIn to the head of marketing at a US company called Tempest, which does alcohol addiction recovery programmes, to ask if she’d be interested in being our adviser. Tempest’s marketing is really inspirational and was something we aspired to emulate, but in a different category. If you narrow down your search based on companies who are doing stuff you want to do, that will guide you in what you want to get out of the adviser.

Have a first meeting

When reaching out to people for the first time (whether via a warm introduction or a cold email or LinkedIn message) you don’t have to straight up ask them to be your adviser. Ask the person if you can steal 15-30 minutes of their time, either in person or online, to discuss X issue, and be specific about what you’re asking for. If they agree to the meeting and it goes well, you can ask them if they’d be interested in being an adviser on a more regular basis.

Having a first “date” will help you ascertain whether you’d like working with them, whether their skill set matches their LinkedIn and, ultimately, whether they could help you with a specific problem or area of the business. 

Set up an advisory agreement

Once you’ve got an adviser on board, lay out the terms of the agreement in a document. Include the time period during which the adviser will be helping you — whether it’s for a fixed term for a specific project, or on a rolling basis — and set out expectations for how much work will be involved. For example, “one day a month to make a couple of calls and send emails to help the company land partnerships”. Include a cancellation clause too: with our adviser relationships, either side can cancel with 14 days’ notice.

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The advisory agreement should also lay out the terms for compensation. Typically, advisers are paid with equity. According to research from Carta, a platform helping businesses manage their equity, advisers should get 0.225% for advising a pre-seed company, 0.129% for a seed company and 0.068% for a Series A company, based on current rates. We offer our advisers share options with a vesting schedule and a cliff of three months. The cliff gives you enough time to figure out whether the adviser relationship is working before they get options. 

Maintain open communication

A relationship with an adviser is like every other: it requires work. Keep regular contact and give updates — we speak to our advisers once or twice a week — so that you stay aligned. And if at some point your business needs change — and you need a different kind of help from your adviser — communicate with them directly. Ask if what you need from them now aligns with what they are able to provide. 

On the subject of… Hiring advisers

❌ Avoiding crap advisers. A founder-turned-coach explains how he found the best advisers while avoiding the dodgy ones — who a) aren’t helpful, or b) ask for steep equity grants in return.

🔎 Startup advisers 101. This guide covers everything from where to find startup advisers to how to compensate them.

💰 Hiring an executive coach? It can be more expensive than you think, writes founder coach Julius Bachmann. 

📋 Adviser equity. Carta, as mentioned above, has laid out the current equity rates for advisers and why they have changed. 

🤝🏾 Get the most out of your startup advisers. A former VC at US-based First Round gives his top tips for making the relationship work.

https://sifted.eu/articles/how-to-hire-advisers

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