Every startup founder wants to find and collaborate with the right advisors in hopes of solving their most pressing problems. Despite everyone’s best intentions, the more advising relationships we see across our 250+ companies and beyond, the more convinced we are that the traditional advisory model is broken for both founders and advisors.
Founders have trouble getting tangible value from advisors given these relationships are typically 2+ years in length and often exist around no more than a handful of coffee meetings. A vast majority of startups have 5 to 10 general advisors who take equity and end up as nothing more than names on a slide deck. There aren’t specific deliverables or standardized ways to work together. No one knows what fair economics look like.
And it’s not any better for advisors. We often hear that “It’s too hard to find the right entrepreneurs to work with,” or “It’s too much of a time commitment.” “It’s unclear what role I should play,” or “It’s awkward to negotiate pay or equity.”
In most cases, it ends up being expensive, wasteful, and frustrating for everyone involved.
For all these reasons and more, we’re announcing an experiment to fix traditional startup advising. The first part of our early solution is something we call STAR, or “Short-Term Advisory Relationships.” STAR engagements last 90 days, have standardized, performance-based economics, and spell out specific, documented deliverables for both advisors and founders from the start.
- Duration: The 90-day sprint is structured to focus on the most urgent and important company problems. The advisor typically will spend 90 minutes a week with the startup on a pre-defined project. This adds accountability and project-based work for both parties where traditional advising relationships lack both.
- Compensation: By establishing a standard compensation model for the 90-day engagement, STAR aims to reduce the time and effort spent negotiating advising agreements. STAR advisors are compensated with a combination of performance-based equity and cash.
As we get closer to perfecting the ideal solution, we expect to open-source the STAR contract documents, compensation agreements and our key learnings to the entire startup community.
While we think STAR will help fix a lot of the problems with traditional startup advising, it’s not a complete solution — it doesn’t solve the challenge of finding the right experts when startups need them most. Over the last decade at First Round, we’ve seen the power that comes from connecting the right person with the right company at the right time to solve a specific problem.
That’s why in addition to a new model, we’re launching our own Expert Network for First Round companies. The First Round Expert Network is a carefully curated community of over 100 experts across domains — like product, design, engineering, marketing, finance, business development, and human resources — who are available to advise First Round companies to help solve their biggest problems, today.
What we think will make the First Round Expert Network so unique is our focus on identifying specialists who can solve short-term problems vs. pairing founders with high-level generalists who have historically occupied advisory roles. Startups move fast and their biggest challenges change week to week and month to month. It’s questions like, “What is the right way to structure a SaaS sales team?” or “What’s the best way for an ecommerce company to negotiate with carriers for optimal shipping rates?” or “How should I launch our consumer product to the public for the first time?” and thousands more that founders need to address now.
To help us tackle this big problem, we’re thrilled to share that Whitnie Low is joining First Round.
Lastly, like many of our other initiatives, STAR and our Expert Network are starting out as experiments, solving problems for experts and First Round companies one introduction at a time. If you’re interested in our learnings, want to be kept in the loop as we open-source the STAR model documents, have an interest in sharing your advisory experiences, or would like to get involved in the Expert Network: sign up here.