Company Advisors? Asset or Liability? Depends if they are In or Out.

Last week, I had the pleasure to participate and speak at the annual South Florida FundingPost event at the University of Miami in Florida. A question was posed from an attendee where he referred to his Board of Advisors as strong assets. The Board he described was impressive. A Who's Who of industry players. With that Board he was trying to validate that his emerging company had "legs" beyond his competitors. I listened to his pitch on his company and yes it was interesting, I dont know about "game changing" but yes interesting.

Then I posed the following question, " Your company sounds interesting and compelling". He replied "Yes and thank you". "Your Board of Advisors is impressive". His reply, "Thanks". Then the tough question, "How many of your Board of Advisors are investors in your company? They seem committed and seem to have the means to assist you in launching", I asked.

His reply, "None, but they are contributing a lot of time to the project for no pay".

When I heard that, my interest immediately shut off. If such a good company that was going to skyrocket. If such a great company, that it would exit with great returns. Then why are the Advisors investing? That is very telling. If they thought such a great investment that they were seeking other peoples capital why wouldn't they invest if they believed in the success?

My feeling is that entrepreneurs should be careful about recruiting Boards of Advisors or Directors of noteworthy individuals who dont invest. Especially if they are high networth cashed out successful entrepreneurs. Its a telling sign that they are not confident enough to put "skin in the game" especially if these are individuals of means. To me it is a red flag.

Yes, as a start up or growth entrepreneur it is great to have a "Who's Who" on your Advisory Board or Board or Directors, however, when inviting them to participate solicit some investment level even if small. A $5,000 or $10,000 investment from a wealthy individual may not seem alot but it is still a vacation (albeit modest) for a wealthy individual. But it speaks volumes of confidence that they are willing to "put their money where their mouth is".

I always ask this question of investment. If nothing at all it certainly leads to an interesting conversation.

Now there are exceptions to the rule. For example, individuals from Academia who are thought leaders in a field may not have the means. Individuals from industry trade organizations may be in similar situation. Government or regulated industry persons may be precluded by law. But define clearly what they are contributing to their respective boards. (In one of my portfolio companies, the academia board member, an expert in the field, is a small investor in the company but yes it says alot).

All in all, Boards of Advisors and Directors can bring a lot of value, creative ideas, contacts, vision and support. But it speaks volumes, loud volumes, when they couple that with any size of meaningful investment dollars in a company.

Welcome to My Old School VC Blog!

Well it had to finally happen! An old school VC who built a reputation and business on old school tactics such as wanting to meet the people I do business with and building long term relationships is now reaching to the cyber world! Why? Because after fifteen years in the venture capital business and 25 years as a CPA and business professional and entrepreneur, I am wondering if the lessons of yesteryear are being lost on the new social media/wired/connected crowd.

So I figured, lets give this blog stuff a try to hopefully convey what I am seeing on a daily or weekly basis to those folks who wish to tune in. I dont expect many but hey who knows? Lets give it a try!!

Each post, I hope to convey the lessons I am learning as I continue to grow and experience working with emerging businesses throughout the region. Whether tips, ideas, lessons or observations on business building, strategies, financing, human interaction and exits I am hopeful that a few nuggets will be conveyed. We'll see as I am counting on your comments and feedback!

So who am I? I guess I am kind of a boring guy who got lucky. Not an Ivy leaguer. First generation. Started to work when I was 10 years old in the family corner grocery store. Went to college with a goal to get a good job, became an accountant with the Big Eight focusing on growth entrepreneurs (for those too young to remember there used to be eight major accounting firms now only four remain ): ), earned an MBA, started a few businesses along the way and ended up in venture capital in 1995. Fortunate time. Didnt know much about the "buy side" of the industry except seeing from my advisory role but I figured hey lets give it a whirl for a year or two. But wow! What a privelege. Imagine waking up every day and having the thrill and honor to work with the most creative, inspirational, committed and driven sector of the economy: THE ENTREPRENEURS!!!!!

What was to be a couple of years in the industry is now fifteen. A lot more grey hair, perhaps cynicism but the enthusiasm still exists!

So let the games begin! I dont have visions of thousands of people following me. But if I get one entrepreneur or aspiring entrepreneur who I can help that all that counts. Tune in, lets work together, and build a community that is sensible, driven, respectful, successful and most importantly FUN!!