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What's the best approach to build a board of advisors?

I have recently acquired a ophthalmology / telehealth solutions company. The company was founded by an ophthalmology but that person exited from the ownership structure but remains an advocate and ambassador for the company. This person does not have any role in the company and does not meet with us on a formal basis although they are always accessible talk to.


As it stands, we have no professional medical representative in the company. So I want to form an advisory board. The advisory board I'm envisioning would be composed of ophthalmologists, optometrists, health/hospital administrators and maybe one of my contacts from the business world. I'm thinking about 4-5 people max. I already have some willing participants. We would initially meet quarterly and discuss business and product strategy. They would also help us open doors.


I've never done this before and I'm wondering about the customary practices for rewarding advisory board members. I'm sure some will elect to do this for their resume but do they also need to be compensated in some manner (flat fee per meeting, stock options...)?

Any suggestions from people who've done this sort of this would be appreciated.

Thanks!

7 Replies

Ian Shearer
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Ian Shearer Advisor
Executive Chairman at Parakeetplay
Richard. I sit on a number of boards and advisory boards. The compensation varies from company to company depending on the company's circumstances. If they have the cash they tend to pay cash if not some stock is normal. In one company I have not been offered any compensation which surprises me and (needless to say) that company is bottom of the list of my priorities. In truth I will probably quietly resign shortly.
I would never accept a role without compensation simply because "it looks good on my C.V." Maybe people in the medical world would view things differently...I dont know.
Steven Corn
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Steven Corn Entrepreneur
CEO at Metis Advantage
I am facing the exact same challenge. I've managed to get one advisor on board so far and have reached out to several more. I talked to several lawyers/advisors about how to structure this.

I don't have cash. But I created an equity pool of 5% for advisors to be allocated 1% for each person. I've been advised to make it a 1 year vesting period since there is no cash.

I'm sure that there are many other ways to structure this. But this feels good to me.
Axel Meierhoefer
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Founder of MaxMomentum Institute - we help small & medium sized companies 2x leads & conversions using our unique system
Richard, I think you want to be looking for a diverse set of advisers. If I were you I would try to ask the previous owner to name people she knows from her time at the helm that she would recommend for the expert role. The other aspects of a diverse group should include at least 1 person for business development, 1x for marketing, and possibly one with direct access to the regulatory and research community.
As for compensation I think stock is OK. If 1% is fair is a matter of valuation. The least I would expect in addition would be to cover the travel expenses. I realize that one can meet online these days, but spending time in person is really important to get to know the culture of the company, the cohesion of the team that you lead and the adviser team.
Steve Kaye
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Steve Kaye Entrepreneur
Steve Kaye Photo
Much depends upon your finances, interests, and expectations.

I recommend starting by writing a description of the ideal advisor. Then plan questions that will help you interview candidates. Finally, go into your network to seek recommendations or explore interest.
Alan Petzold
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Alan Petzold Entrepreneur
ECC / Evolving Coal Corp
Richard Learn to Barter!!! Maybe YOU can do something for them. Or you may have something they desire. Money is NOT always the Answer especially if you do not have it. YES I do agree that you have to pay for meetings (make it a nice place) and travel 2 to 4 times a year until you are cashflowing.

And I certainly agree withSteven Corn. BUT I would limited as to a time period. Say 2 to 3 Years as long as they advise and do DO some work or research that would benefit you and your company. Having all Doctors is NOT good. Yes have someone that is business oriented hopefully in your field as well. REMEMBER You can at a later day be bought out or merger with another company. Refer to your exit strategy and YOUR Employment contract. Good Luck. Alan infoSeeker007
Russ Smith
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Russ Smith Advisor
Organizational Development, Career Transition Coach, Lecturer, and Author
Hi Richard,

I agree with the comments from Axel on getting a diverse set of advisors. A few from the medical field with networks and specific knowledge of current industry practices of course, but also bring some some from outside the field that can bring new perspectives and who will question why. Also, diverse technical expertise - business process/operations, finance, marketing, etc.. I'd add that your advisors should have a strong interest in what your company is doing and a passion for making it a success. Making the business a success is their motivator, not the compensation.

That said, covering meeting expenses is a minimum, with stock or options as a good way to compensate without negative impact on cash flow at this stage. If I'm interested or excited about a company and its product, I can easily be convinced to become an active advisor, with limited compensation. Look for qualified people with that mindset, rather than those looking for a big payout or a resume line.

Another item from Axel's comments I agree with is the value of face to face meetings. With technology today, many meetings could be held via video or audio conference. But longer, or more frequent, face to face meetings when the group of advisors s formed to build a "team" of advisors that could effectively debate issues, allocated responsibilities, and build an understanding of each other's strengths would add to the advisors value to your company. I'd continue with a higher ratio of face to face meetings for the first year or so and then move to more audio/video meetings, once relationships have been established and capabilities of each member are understood.


Richard Pridham
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Richard Pridham Entrepreneur • Advisor
Investor, President & CEO at Retina Labs
Thanks for the suggestions. Some good ideas.

My goal is to for a multi-disciplinary advisory board composed of 1 ophthalmologist, 1 optometrist, a healthcare executive with expertise in telehealth and one or two business people who can contribute to marketing, sales, strategy...). I have identified some potential candidates and will evaluate the different ways to incentivize them.
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