“We need to choose the right startup advisors to make sure that our project will be successful”. Has anyone in your team ever said that? If not, you better read this article.
Many of us know, or have known, at least one startupper in the past decade. There are at least 25 ecosystems in the world around which startups come to life, grow, and, often, fail. Silicon Valley is certainly well known, together with Miami, London, Zurich, Malta and others. And the last two years have shown that anyone can start a project anywhere, as long as they have a laptop, WiFi, and a great idea.
However, having a brilliant idea does not always mean that you will be successful. Why?
Startups develop in dynamic environments, in which team members might be asked to fill a wide variety of roles. There is no such thing as the static nature of large corporations, where roles are clearly delineated: X is responsible for this; Y is responsible for that, Z approves everything. And repeat.
On the other hand, too many startuppers with zero (or little) experience have assumed the title of CEO (chief executive officer), perhaps accompanied by CFOs, CMOs, CIOs who lack adequate skills and sufficient experience to ensure the success of their project.
There is a widespread myth that startuppers are very young entrepreneurs with a brilliant idea, who can develop an outstanding product despite never having worked before. Mark Zuckerberberg left Harvard to develop Facebook. Michael Dell laid the foundation for what is now an IT giant at only 19 years old. Matt Mullenweg created WordPress at age 19. Catherine Cook created MyYearBook at 14, with a 100 million exit six years later.
We must recognize that examples like the ones we just mentioned are very special success stories. And certainly there are many lesser-known startups that also made profits and grew in just a few years. In most cases, however, startups fail.
As said, teams often lack the appropriate skills and experience. What to do, then? They should choose advisors who can help their startup and are able to guide strategic choices. Business development, legal, risk management, communications, and human resources are critical to the success of any company. Unfortunately, more often than not, entrepreneurs (and teams) tend to see these aspects as secondary and not worthy of investments.
Why do startups need to choose the right advisors?
Think about this: what happens when fundamental aspects are underestimated? Risks that were not foreseen manifest themselves, and the startup has to deal with them. Which, in many cases, leads to project failure. A situation that could have been avoided by hiring an advisor who specializes in risk management. When you underestimate the legal aspects, you have to pay lawyers for them to solve the problems that have arisen. Which can cost more than it would cost to get a lawyer as an advisor from the very beginning. Likewise, without public relations, the project will not be able to position itself as an industry leader and catch investors’ attention. And so on.
How to choose the right advisors for your startup?
We must admit that, today more than ever, there are too many people who call themselves “advisor”. LinkedIn is populated by people who present themselves as gurus of something, and then you figure out that they have little to no practical experience. First of all, do your research. What companies has the advisor worked with? Are they all startups or even larger entities (medium size companies, corporations, public institutions, etc.)? What do they specialize in? Can they give you example of successful stories? Are they able to prove that they contributed to those successful stories?
Identify the gaps that your team has and reach out to the right people. Identify the advisors who can really help you grow and develop your idea. Those with the skills that you lack. The ones who can take your project to the next level and can practically add some value to your project.
Written by Erika Rosenstein, startup advisor and Managing Director of Rosenstein Capital.