The Impact of Advisors on Startup Success: Insights from Kevin Dick

Kevin Dick, a well-known figure in the startup and venture capital community, offers a deep dive into the role of advisors in shaping the success of startups. This exploration addresses three key questions: whether advisors contribute to a company’s success, whether investors consider the presence of advisors in their investment decisions, and the consideration given to advisors by venture funds. Let's delve into each of these aspects with the insights provided by Kevin Dick.

1. Advisors' Role in Startup Success

The first question to consider is whether advisors truly make a difference in a company's success. Theoretically, advisors can either positively or negatively impact a startup. They might offer invaluable advice and introductions, or provide guidance that may be detrimental or distract from core objectives. Personal observations suggest that, in most cases, the net effect of advisors is neutral.

There has been no substantial statistical evidence to draw definitive conclusions, making the situation appear neutral at present. Advisors often do not have a significant positive or negative influence on a company's trajectory. This neutrality is a result of the mixed outcomes—some advisors provide immense benefits, while others create more harm than good.

2. Advisors and Investor Decision-Making

The second question revolves around the role of advisors in gaining the attention of potential investors. Advisors can significantly increase a startup's chances of securing meetings with investors due to their recognized status and reputation. Investors often view an advisor's involvement as a sign that the investment is worthwhile. The advisor implicitly vouches for the entrepreneur, reducing the perceived risk of the meeting.

However, the presence of advisors does not significantly affect the actual decision-making process once the meeting is secured. This suggests that while advisors can get the meeting, their role in driving the investment decision remains limited. The advisor's reputation serves as a trust-building measure but does not substantially influence the final investment decision.

3. Advisors in Venture Funds' Decision-Making

The final question explores the perspective of venture funds regarding advisors. Kevin Dick notes that his fund does not currently consider advisors in its investment formula. He mentions that while new evidence could alter this stance, current practice does not factor advisors' involvement into the decision-making process.

Investment criteria typically focus on the core metrics of the startup, such as the management team, market potential, and growth projections. Advisors, while potentially invaluable, are not currently a key criterion for most venture funds. However, this may change in the future as the impact and importance of advisors on startup success become more widely recognized.

Conclusion

The interplay between advisors, investors, and venture funds in the context of startup success is complex. Advisors can often facilitate meetings with investors and may provide valuable guidance, but their direct impact on investment decisions and long-term success is largely neutral. As the startup ecosystem evolves, the role and importance of advisors may shift, potentially leading to changes in the investment landscape.

For entrepreneurs and startups, the involvement of advisors can be a strategic advantage, particularly when the advisor brings significant experience or capital. However, investors and venture funds primarily focus on core business metrics and team strength, making the role of advisors a secondary consideration in their decision-making process.

References

Cited by Kevin Dick's own observations and practical experience in the startup and venture capital space. No systematic data collection was cited for the investor perspective but based on personal observations.

Keywords: advisors, startup success, investor decision-making