Why the Wrong Type of Startup Advisor Will Kill Your Chances of Raising Investment

15th December 2022

Investable entrepreneurs don’t work in a vacuum. They build their network, seek feedback, and follow their own path. They also stay open-minded and flexible enough to make essential changes if their actions are clearly not working.

You won’t come across many, if any, investable entrepreneurs who operate on a lone-wolf basis. That’s not the way business works. Even a successful solo founder is rarely on their own.

When you’re a founder with a product or service you want to build and scale, you’ve got to know the proper strategic steps to take and be able to pre-empt the obstacles you need to overcome. What’s the best way to do that? By drawing on the knowledge of people who have already walked this walk, talked this talk, and can guide you through the complicated starting-up-a-new-business minefield.

We’re talking about advisors.

The pros and cons of startup advisors

Pros and Cons - Startup Advisor - Robot Mascot

Founders are repeatedly told to get a team of advisors around them, and that in itself is solid advice.

An advisor, or board of advisors, can help a founder achieve great success. Having your advisors listed on your company profile can also provide an extra incentive for a potential investor to consider your offering more carefully (depending on who those advisors are, of course.)

It’s also useful for fundraising on sites like Dealroom, and you can read more about that fundraising promotion.

An advisor’s whole reason for being is that they possess the experience and knowledge you don’t. The best advisors also know the right questions to ask you, so you will a) be completely prepared for your first or next funding round and b) have additional options and courses of action to consider that you might never have thought of on your own.

Related: Startup Business Plans: The 3 CS You Need To Create the Perfect Plan.

So, if you’re a startup founder and your one, or half a dozen, advisors are all giving you excellent advice and asking you the right kinds of insightful questions, that can be a massive benefit. This article why your startup needs an advisory board on Entrepreneur.com makes an excellent case for why advisors are advocates a young business shouldn’t be without.

But not all advice is valuable, and having the wrong advisors around you can spell disaster for your business and ruin your chances of raising investment.

The wrong type of startup advisor

Wrong Type - Startup Advisor - Robot Mascot

It’s the advisors who are seemingly so experienced that everything they say must surely turn to gold.

At Robot Mascot, we see this all the time.

On paper, it seems like a no-brainer for an inexperienced startup founder to snatch up the chance of bringing a highly experienced advisor on board. Maybe they’re a partner in a FTSE 100 company, or perhaps they’ve been the Chief Financial Officer at a multi-million-dollar corporation. They’ve got years of top-level experience and a heavyweight, powerful CV that’s beyond dispute.

(The ‘beyond dispute’ part is important because we’re not suggesting that these are the wrong type of advisors because their credentials might be bogus. On the contrary, these are legitimate business professionals with exemplary experience and qualifications.)

So, why are they the wrong type of advisors?

They are the wrong type of advisor for three reasons;

  • They’ve never been a founder.
  • They’ve never raised startup funding.
  • They don’t know what it’s like to be in your shoes, so they can’t give you the practical experience you need.

It doesn’t matter that they’ve spent their entire career at a corporate level, working with massive corporations and leading them to achieve incredible growth and staggering results. They haven’t walked the startup founders’ walk. They haven’t talked the startup founders’ talk. They made their reputation by coming into a business already in the position you hope yours will reach in five years’ time and standing on the shoulders of the people who built that business from the ground up.

They didn’t get their hands dirty building and scaling it themselves. All that messy work had already been done.

They’ve never raised Pre-seed, Seed or Series A funding.

Their experience is a million miles away from where you are right now.

You’re starting your journey in the dark and twisted woods. All their journeys started on the already sunlit slopes halfway or more up the mountain.

But, surely, some of their advice must be valid?

Reach out to them again in a few more years when your business is at a place they’re familiar with, and their knowledge will more than likely accelerate you to the next level and beyond.

Their advice will be hit-and-miss at best and fatal at worst because it will over-complicate everything you’re doing.

It’s not their fault. It’s because of the level they’re at. They’ll guide you to overthink and encourage you to add unnecessary bells and whistles that investors don’t care about because, in the world they’ve come from, it’s that level of detail that is expected.

However, that’s not remotely the stage you’re at right now.

The last thing a startup founder needs, when they’re already trying to navigate the dark and twisted woods of raising investment, is an over-experienced advisor who will make seeing the woods for the trees even harder than it needs to be.

It’s like asking a NASA rocket scientist to design a bicycle or Salvador Dali to draw a picture of a fish.

They’ll be able to do it, but the bicycle will be over-engineered, and the fish will probably look like an alarm clock. Either way, if you took either of them to an investor at this early stage in your startup journey and presented them as prototypes, their response would undoubtedly be negative.

Listen to the wrong type of advisor, and you’ll end up with a corporate plan that isn’t fit for startup fundraising. You’ll produce assets you can’t explain, and you’ll be unable to stand up to investor scrutiny.

A warning about getting the wrong type of startup advisor

Warning - Startup Advisor - Robot Mascot

When you’re a startup founder, it’s natural to look at anyone ahead of you and think, “There’s somebody who has done what I want to do. I’ll bring them in to find out how they did it.”

Similarly, it’s natural for an advisor to look at a startup founder and think, “There’s somebody who’s trying to do what I did. I’m here, I’ve made it, so I’m the perfect person to tell them how it’s done.”

But just because it is entirely natural doesn’t make it correct.

There’s a real danger that startup founders can get so much poor advice that it starts looking like good advice, which means it is critical that you evaluate all the advice carefully regardless of where it came from. Is it relevant? Is it in context? Why is that person giving me this advice? What other perspectives have you sought?

What do you think is the right thing to do?

At the end of the day, you are the founder of your startup, and your own ability to self-lead is critical.

You created this company, product, or service, and although it’s important to seek out the best advice, it’s equally important to know that it’s not an advisor’s job to tell you what to do.

There are many different types of advisors for startups, and the best ones empower you by arming you with the right questions that enable you to follow your own path. Even if they’re experts at starting up their own company, that doesn’t necessarily mean they’re going to be experts at helping you start up your company.

  • Never take advice and act on it without thinking it through very carefully beforehand.
  • Always listen carefully to advice when you know it comes from the correct sources and is being given with the proper intentions.

Having the right advisors on your team can supercharge your fundraising campaign.

Having the wrong advisors on your team can decimate it.

To find out more about becoming an investable entrepreneur, you can download a free copy of James Church’s bestselling Investable Entrepreneur book.

Investment Pitch Structure: Why Your Pitch Structure Is Vital
Keeping the Faith: How to Back Yourself in the Face of Investor Criticism
Dealing With Investors: What It’s Really Like

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    2024-06-14T14:23:30+00:00December 15th, 2022|Categories: Pitching, Advice|