Angels > Advisors!

Too many (pre-) seed pitches we see have more advisors than founders on the team page. At best, this is a slight positive (rarely). At worst (most of the time), it’s a net negative.

Adding decorated individuals to your advisory board when getting started sounds like a great idea as their “personal brand” gives you credibility, will help you fundraise and there’s no real downside to it, right?

I beg to differ.

One, your equity (if your startup turns out the way you hope) is incredibly valuable. You want to make sure individuals who get it actually deserve it (such as your hard working employees).

Two, unless the advisors:

• Can clearly add value at this early stage (ie within the next six months) AND
• Are incentivized the right way to actually put in work on your behalf

They don’t add much. Instead, they are not only a misallocation of your equity but likely also a distraction.

Think about it:

1. Most people with a fancy resume don’t understand the earliest stages of startup building, as good as they are at what they do.
2. A lot can change in a few months in early stage startup land (smaller and larger pivots happen often). Bringing on advisors that may eventually become relevant means chances are high they’ll never actually become relevant.
3. The best people are the busiest. It takes a lot for them to want to spend time on something new - especially when it’s unproven. Thus, will they really put in work if they get equity “for free”? Especially when times are tough?

Three, VCs discount the value add of advisors for the reasons mentioned above. So it won’t help you with fundraising either.

Rather, if:

• These individuals have been successful in their career,
• Are actually (truly) excited about what you’re building and
• Are serious about helping you

Then most of them can afford to put a (even small) angel check into your pre-seed round / will invest on a note that converts into the next round.

If they invest, incentives are much more aligned, it increases the likelihood of them putting in hard work on your behalf and it is a much stronger signal towards the (VC and hiring) market.

On the flip side, if these individuals can afford to invest but don’t, then why would they put in hard work - especially when things aren’t going as well as they had hoped?

Thus, focus your efforts on bringing on relevant angels vs. advisors at the start of your startup journey.

Likely, you already have individuals in your network that you’d love to have involved as angles. If you’re looking for additional ones, this list from NFX’s Signal platform is a good starting point.

If you’re still considering bringing on advisors after reading this newsletter, have a look at my piece on when and how to go about bringing them on.

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👋 - Looking For Pre-Seed Funding?

At focal, we lead pre-seed rounds backing software / platform / infrastructure builders across the 🇺🇸/ 🇨🇦 reinventing how industries operate and business is done.