Board of Advisors or Advisory Boards as some call them are often very misunderstood from a terminology, purpose and execution perspective. Having had a lot of experience in working in the Silicon Valley ecosystem, let me shed some light on how this should work.
Firstly, Board of Advisors is very different from Board of Directors — an important point given there exists widespread confusion around the terminologies. Board of Advisors are non-binding and have no fiduciary duties unlike Board of Directors. Its informal nature also provides flexibility in how it is structured, governed, engaged and managed. If a company plans to go public then it is legally required that it set up a formal board of directors and this group may or may not come from the so-called Advisory Board.
Typically, it is companies at the start-up stage which set up Advisory Boards to plug critical skill gaps, gain access to market, tap the investor community, set branding and gain PR momentum etc. Founders and/or CEOs should treat Advisory Board meetings as a vital company asset. Advisors can provide valuable feedback and recommendations if they are given adequate time and notice to prepare. For example, an entrepreneur could add a lawyer for specialized legal advice, a PR person for branding or marketing advice, a former entrepreneur for advice on growth and exits, a domain specialist etc.
I always mention people to have a good balance on the Board of Advisors as I often find them very skewed in one direction or another, including some of the companies that I have had direct experience with. The balance typically comes with having a wide range of expertise, while I recognize that every company is different and may have very specific needs depending on the Founder/CEO background, industry, geography etc. I could generalize the need for a few different sets of people for most companies to be effective, let us examine these in some detail and in no specific order:
While the first four on the list in Figure1 are nearly a must have for a company, the fifth one is optional and need driven and even company lifecycle and…