Why advisory board matters to a first-time founder
An advisory board gives founders regular access to experienced people and their networks without making every adviser a director. It can improve decisions about areas such as market entry, science or regulation. It works best when the company asks clear questions and keeps members involved.
Examples of advisory board
A health-technology start-up asks a clinician, a hospital procurement leader and an experienced founder to meet every quarter. They review evidence plans and routes to market. They cannot approve budgets or make commitments for the company. Each signs terms covering confidentiality, conflicts, time and payment.
Common misunderstanding
An advisory board is usually not the legal board of directors. Do not present advisers as having powers they do not have. They do not automatically have the same legal duties as directors, although contracts or local law may create duties. Their involvement does not validate the company or replace management judgement.
When to use it
Create one when regular advice from experts with different skills will improve specific decisions. Set its scope, meeting schedule, access to information, confidentiality, conflict rules, payment and term length. Ask a local lawyer to review the arrangement if advisers might appear to act as directors or company representatives.