The Benefits of An Advisory Board
Many start-ups companies can progress much more quickly with an experienced Board.
The depth of experience, the critical thinking capacity and business connections add significant value. However, as a startup company struggles to capture funding, it often isn't necessarily a great proposition for a non-executive director.
The Australian regulatory framework as it relates to company directors is particularly onerous - with the intent of ensuring that directors remain diligent at their role, protecting and growing shareholder wealth. There are significant legal ramifications if the company they are a director of trades whilst insolvent. Directors can expect to be sued under these circumstances in our increasingly litigious society. Coupled with generally equity stakes in lieu of payment or relatively low fees, makes becoming a non-executive director in a start up an unattractive proposition.
The Alternative to Traditional Company Boards
With this as a backdrop many companies find directors, by necessity, very focussed on minimising risk as opposed to performance, and this environment isn't necessarily conducive for the founder of an early stage startup.As a result there is a growing interest in creating an advisory board. In a nutshell, the advisory board focuses on the business as coaches and mentors rather than something regulated by ASIC. It also adds kudos to the capital raising and profile for the advisory board members as the deal gets shopped around.
It ensures much more robust thinking and as a result leads to achieving more capital for the same amount of equity.
Emergination provides advisory board services, as well as providing seasoned company directors to assist emerging companies to grow.
In a nutshell
Quick and key facts