An advisor is a professional with industry or business expertise that’s relevant to your company. They provide specialist advice – and in some cases, networking contacts and opportunities – to help your business succeed.
There are different types of business advisor - these are the most common:
- Board Advisor
Offer strategic direction, sit on the Board of Directors
- Technology Advisor
Implement best tech practices, shape the longer-term tech vision
- General Advisors
Strategic, not on the Board of Directors
Advisors have often launched new businesses of their own in the past, or helped others to do so. They might provide advice about how to raise funding or scale activities up, or bring a deep understanding of the industry or market you’re planning to operate in. They may provide ideas or suggestions, make useful introductions, or be a sounding board for the Directors.
They’re not contractors or freelancers, and their work for you isn’t as clearly defined as simply providing a tangible service in return for payment.
Depending on who is advising you, you might agree to pay them in cash, equity or a combination of the two. It’s more common to give equity to advisors.
When you’re starting a new company, tapping into the knowledge and experience of expert advisors and mentors can be invaluable. And just as with employees, freelancers and consultants, it’s important to make sure you both agree to terms written in a contract (in this case, an Advisor Agreement) so you know what to expect from the other party.
Read more: Advisor Agreements: Shares, equity and vesting for mentors and advisors