Quote – “We should have called you last year” – Attributed to many startup entrepreneurs
If I had a dollar for every time I heard this from a startup prospect, I could have retired by now. The fear of the unknown (especially related to fees) often stands in the way of startup entrepreneurs engaging advisors at the right time. So, they delay engagement and then jump in by selecting any advisor who appears to know more than they do in a particular area (like law or accounting.) As Erasmus said, “In the land of the blind, the one-eyed man is king.” But, you should not have to settle… good startup advisors are worth their weight in gold – just ask any successful entrepreneur.
There is an abundance of good advisors in the market – so spend a little time on this selection process. Pick someone who knows your space; not just a subject matter expert who seems to know more than you do. If you mention Ruby on Rails and they think that is Jill St. John on a train (you have no idea how hard it was to work in that archaic reference) or you mention Python and you get a John Cleese or Hulk Hogan reference, you are talking to the wrong people. Look, your advisors do not need to understand every aspect of your business but having some experience in your space will make them more effective. Startups are not like mature businesses; they have this insatiable appetite for knowledge. They require patience, understanding and a commitment to a long-term relationship. A good advisor wants an entrepreneur to call, challenge them and pick their brain. They want you to succeed as much as you want to succeed. They should be passionate about what they do and have a genuine interest in what you do.
So some hints on picking the right advisors:
- Are they in your space? Are they involved with accelerators or startup companies and do they actively seek and service startups?
- What do your colleagues think? Have they used them and do your colleagues think they “get it?”
- Do they cover both compliance and value? Can they handle the basics but also “think outside the box” for solutions?
- Meet them. Do you like them? Do you trust them? No relationship is more important; you will share your deepest ideas, thoughts and fears with them. For a good advisor in this space, there are no “stupid questions.”
As to timing, don’t delay because of cost concerns. Many advisors in this space understand the scarcity of resources in a startup and work with you to accommodate fees. There are some basics that you can really mess up (like equity grants) and you don’t want to spend a great deal of time and money fixing what should have been handled correctly in the first place. Sometimes the passage of time and an increase in the value of your startup can make the cost of addressing a problem almost prohibitive. So, spend a little time early on checking advisors out and retaining them… you will find it well worthwhile.