In most startups, the board of directors will be small and made
up almost entirely of the founders and investor representatives. If
a startup needs guidance from seasoned outside advisors, but is not
ready for independent directors, an advisory board can be a good
middle ground.
What does an advisory board do?
An advisory board provides advice and guidance, but does not
have any decision-making power or management duties. Advisory
boards can help founders develop closer ties with potential future
board members, customers, industry contacts and other valuable
advisors, without giving up control over the business. An advisory
board not only offers management and the board of directors a
different perspective but, depending on the advisors' stature
and reputation, can also add credibility.
