Advisory Capital- I'm an AC and proud of it

There’s been a lot of talk about Stowe Boyd’s Advisory Capital post- I read it on Buzzmachine, commented on it earlier in the week, and have now read Fred Wilson’s response (Also via the Union Square Ventures blog), and Jeff Jarvis’ follow-up comments as well. 

After all of that, I still wish I had coined the phrase as it does a great job describing what I’m trying to accomplish with the Ineo Group.  Here’s a better shot at the comments I posted to the Union Sq. ventures blog:

1.    Cash spends.  Simple as that-  VC investments aren’t going away (thankfully) and angel money is a great way to get a company rolling.   
2.    At the same time, many VC’s (Union Sq. is certainly an exception here) don’t have the domain knowledge, the time nor the energy necessary to give the company all of the guidance they want and need.  Angel investors often don't have the necessary expertise to advise a company all the way through the lifecycle.  Filling those gaps is where advice capitalists can provide great value.
3.    The model works very well with companies prior to an external funding event- it’s tough for an AC to build a relationship after VC’s are involved and the company has significant need for unbiased advice pre-fundiing. 
4.     The role has to be distinct from a board of director’s position-  the idea is not to be an representative of shareholders’ but to help the company do what needs to be done.  This might mean advice, help with connections, and often means doing roll-up-the-sleeves actual work. 
5.    Advisory boards are mostly for show and for the occasional morning of advice.  AC’s, or start-up coaches, need to have strictly defined responsibilities, time commitments, and deliverables. 
6.    Compensation should be based on performance and tied to external pricing events.  This is where my sweat gets me my equity. 
7.    All start-ups have holes- some have great products with lousy market-entry strategies, some don’t choose people well, some operate with blinders on, others are paralyzed by competition- they all need help filling the holes and that’s where an AC can fill a role that a VC or angel investor can’t. 

Jeff brings up Denuo- I think it’s difficult for larger companies to guide start-ups effectively because then the advice give to the start-up is subject to strategy changes at the larger company.  The same can be said for strategic investments.   

Another good post on the topic from Tom Evslin's blog. 

(Disclosures-  I was an employee at TACODA, in which Union Square Ventures has an investment and Fred Wilson sits on the board.  Following Jeff Jarvis’ lead on absurd disclosures, I’ve also had coffee with Jeff in a park on a beautiful day).