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    5 Questions to Ask a Potential Advisor

    Business advisors can bring a wealth of experience to your startup.   It’s more important to find the right advisor than to find someone with plenty of time on their hands.   Here are five questions every entrepreneur should ask a potential advisor: 1. What business experience have you had that is similar to my situation? You want to find someone who has gone through a similar experience to the one you are dealing with now and preferably someone that’s in the same industry segment. 2. Are they potentially competing with you? You want an advisor who doesn’t have a conflict of interest with their company. Those who skirt the ethics issue are questionable members for your network to begin with. 3. What kind of success did they achieve at their company? You want someone who is successful at the trade.  Success can be defined differently based on the circumstances. In emerging markets, someone who can stand up a company and grow it could be considered a success even though it didn’t yield an outsized return for investors. 4. Will the advisor benefit from the relationship as well? One way to ensure full engagement by the advisor is to find an advisor who will benefit from working with your company rather than just a give back.   The advisor may want to keep up with the industry or is considering making a financial investment and wants to learn more about the company before pulling the trigger. 5. Can you work well together with the advisor? As in so many other startup relationships (investor, cofounder, board member) you will end of spending a great deal of time with the advisor so you want to make sure you are compatible and can work well together. TEN Capital Network is proud to announce our Advisory Program which provides a roster of qualified advisors to assist in supporting your company in its growth plan. This includes increasing revenue traction, identifying the business model, and helping prepare the company for a fund raise. This program is only available to companies enrolled in the TEN Capital funding program. If you want to find an advisor for your business, please contact us at info@tencapital.group.

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    How to Get the Most from an Advisor

    Advisors provide insight into growing your business as well as burnishing the team both of which are important in the fund raising process.  To get the most out of your advisor here are some key points: 1. Set Clear and Specific Goals Most CEOs who sign up advisors initially plan to use them as a general sounding board.  For the informal advisor this works fine, but for a compensated advisor, the role should be much more focused.  The advisor should have a job description the same as any employee in the company.  The CEO should set clear and specific goals on what the advisor should do. 2. Have a Regularly Scheduled Call/Meeting Advisors generally serve at the will of the CEO or the board but can also be setup for specific term of service.  This makes it easier to transition into new and out of arrangements as the company grows. 3. Make Clear the Preparatory Work that Needs to be Done For each meeting, there should be some clarity on what preparatory work that needs to be done by the advisor.  This sets expectations on both sides on what is to be done. 4. Include the Advisor’s Name on Investor Documents A substantial portion of the value of the advisor is in raising funding.  The CEO should add the advisor’s name and position to the investor documents and make clear the value of the advisor to the team. 5. Leverage the Advisor’s Network Most advisors have an extensive network and one that should be mined for the benefit of the company.  The CEO should discuss what help is needed to see if the advisor’s network can bring additional support. TEN Capital Network is proud to announce our Advisory Program which provides a roster of qualified advisors to assist in supporting your company in its growth plan. This includes increasing revenue traction, identifying the business model, and helping prepare the company for a fund raise. This program is only available to companies enrolled in the TEN Capital funding program. If you want to find an advisor for your business, please contact us at info@tencapital.group.

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    Setting up an Advisory Board for your Company

    In onboarding an advisor there are several key points to consider. First, a board advisor is not the exact same thing as a board director but rather acts more like a board observer.  They are entitled to receive the same information as provided board members and like board observers, they have no voting rights.  A contract should be setup for a formal advisory board member to include the following points: 1. Duties The board advisor acts as a consultant and does not represent the company as does the CEO or the board of directors.   The contract should determine the number and type of meetings (conference calls, group sessions, etc) and the preparation required for the meetings. 2. Terms of Service Advisors generally serve at the will of the CEO or the board but can also be setup for specific term of service.  This makes it easier to transition into new and out of arrangements as the company grows. 3. Compensation The terms of compensation must be made clear as well as the handling of expenses.  For equity compensation vesting schedules should be determined. 4. Information Rights While the advisor has rights to the board notes, the advisor does not have the right to inspect the company’s books. 5. Confidentiality Confidentiality of information is a given. 6. Disclosing conflicts of interest Conflicts of interest must be considered and disclosed as confidential information about the company will be provided to the advisor. 7. Indemnification The advisor is typically indemnified by the company in the event of a lawsuit. 8. Jurisdiction The advisor agreement should make clear the state of jurisdiction in the event of a dispute. TEN Capital Network is proud to announce the launch of our Advisory Program which provides a roster of qualified advisors to assist in supporting your company in its growth plan. This includes increasing revenue traction, identifying the business model, and helping prepare the company for a fund raise. Learn more and sign up as an advisor! This program is only available to those enrolled in the TEN Capital funding program. If you want to find an advisor for your business, please contact us at info@tencapital.group.

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    Three Ways to Know Your Market Better

    One of the key criteria in funding startups is the entrepreneur’s knowledge of the target market and customer. Size of market, growth rates, and segmentation are key components the entrepreneur should know well. In this post we’ll look at three ways to know your market better. The first place to look is on the web. You’ll need to first identify which industry(s) you’re in. From that you can find out several facts about your target market size. The next step is to find out what trade associations and conferences are related to it. You can contact the trade association and find out more about the market. Usually, the director of the association has the key market information you’re seeking and will make that available to you in an email or phone call. Their job is to foster the growth of their industry segment by informing others about it. The third step is to attend a trade conference. You’ll learn more from those on the exhibit hall floor than you can from articles or other means. It’s worth a day walking the show to get the details. Finally, avoid market research reports. These reports cost anywhere from $2,000 to $25,000. Most of these are simply a compilation from a direct mail campaign that is far from comprehensive. While they can be helpful they certainly aren’t worth the money. Best regards, Hall T.

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    NDAs, Not on the First Conversation

    Everyone once in awhile I’ll come across an entrepreneur who wants to tell me about his deal but before giving me any details wants me to sign an NDA which is a Non-Disclosure Agreement that requires the signer not divulge the details of the subject matter to anyone for a certain period of time (usually 2 to 5 years). To an angel investor this is a red flag. When an entrepreneur won’t even show me his one-pager without my first signing his Non-Disclosure Agreement that tells me his deal is not protected and most likely is not protectable. I advise entrepreneurs to have a one-pager ready to share with investors who show interest after a brief discussion. The one-pager should state what the business does but doesn’t necessarily go into details about how the IP actually works. If the discussion goes far enough that it enters the due diligence phase and the investor wants to see the “secret sauce” then it’s reasonable for the entrepreneur to ask the investor to sign an NDA, but not at the beginning of the first conversation. While I understand the entrepreneur’s concern about protecting his idea and subsequently his business, it’s difficult to generate interest among the investors when you can’t even tell them the basic concept. The entrepreneur should be able to inform the investor about what the product or service does at a high level and what performance advantages it has over other methods. My rule for signing NDAs is that I should know exactly what is being protected – the technology, the business model, the concept, etc. Signing an NDA without knowing this could mean the investor is signing away his ability to invest in any deal that is related to the entrepreneur’s target market or application. To carry out the conversation, I invite the entrepreneur to tell me about the non-confidential matters. “Just tell me what you can without an NDA.” This potentially keeps the conversation going. Of course, the first subject to discuss after receiving the one-pager is how can one protect the idea – patents, copyrights, trademarks, trade secrets, etc. Best regards, Hall T.

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