By TOM TAULLI

FOR a startup, an advisory board can be extremely helpful with boosting your operating team. “Advisors often have more scar tissue and can help avoid land mines,” said Ranjith Kumaran, who is the founder of PunchTab. “But they can also broaden strategic thinking and certain advisors have access to market data that is otherwise hard to come by.”

Yet many startups make the mistake of stacking their advisory board with big-name people. The thinking is that this will pump-up a company’s credibility.
“You want advisors who can spend time with you,” said Vineet Jain, who is the CEO and co-founder of Egnyte. “It’s not about getting resumes to increase your credibility. This often backfires because VCs can see through this.”

Increasing credibility
So how can you put together a solid advisory board? Well, let’s take a look:
Size: In the early stages, keep it manageable – say three to five. You want to make sure you have enough time to spend with your advisors.

Compensation: It should be in equity, in the form of a stock option. The rule-of-thumb is that vesting is over a two year period.
In terms of the amount of equity granted, this depends on how active an advisor is, with the range going from 0.1per cent of the company’s outstanding stock to as much as 1 per cent

Criteria For Selection: “I like to find advisors that are living what you’re living,” said Ranjith.   “And I think it’s important to keep them close to the company; they are the ones who will keep you sane and remind you that you are not alone.”

It also helps to look for advisors that can help fill holes. For example, Jay Srinivasan – the CEO and co-founder of  Appurify – looks at the following categories:

Start-up/founder coaches, mentors – generalists who have gone through the journey before and weigh in
Industry experts/connectors – folks that are senior in the industry that you’re selling into (either as executives, or well respected technical leaders)

Technical advisors – technical experts in your field
Sales/marketing advisors  – folks that will help you build out an enterprise sales process/team/hiring, or the same with marketing for consumer focused companies

Investor /fund raising advisors  – folks that will help you fund raise
Opportunistic  advisers  – folks that don’t fall into any of the above categories, but can help you with a large deal/partnership
Interacting With Your Advisory Board: Many startups will have periodic meetings, say every quarter. But some do not. Instead, the advisory board is called on when needed.

But whatever approach you take, it is important to keep your advisors updated on any new developments.

Tom Taulli (@ttaulli)  is an  advisor of tech companies and  author of books on  venture capital, M&A and IPOs.