Top tips to make a proper advisory board for health tech startups in 2022.
The digital health startup scene has grown up a lot over these past years. The pandemic has acted as a catalyst for the industry. As entrepreneurs are increasingly tackling the more significant and more complicated healthcare problems, demands on their talent base have increased significantly. The right advisors engaged appropriately can dramatically speed progress, reduce risks, and increase your likelihood of success. Changing the way things work (e.g., creating a new business model), inherently involves a level of complexity that requires diverse expertise and difficult problem-solving. Advisors can offer operating experience and insights into areas of expertise that you’re very unlikely to find available with an early-stage team. When you enter the health tech industry as a new startup, an advisory board is a crucial foundational step. As those insights can have a fundamental impact on your health tech startup.
It’s becoming the norm for healthcare startups to add medical and regulatory professionals to their core team of business people and techies. Additionally, digital health companies, young and old, are increasingly establishing medical advisory boards. The reasons for it are mostly obvious: It gives you access to insider knowledge and can significantly increase market acceptance.
Recruit The Right People
This is the most important part of the process. You need to find the right people for your advisory board, with a balanced mix of credentials. You must include a medical professional who has some sort of expertise related to what your company is offering. In addition, you should recruit someone who has experience in helping startups succeed, and can guide your development procedures.
Decide How Much Equity to Reward
When you get advisory board members for your startup, you’ll have to give them some equity. This equity depends on what they’re contributing to the company, and the amount of leverage you’ll give to them. Make sure you offer appealing equity so that you can get top-notch members on your board.
Include Vesting Schedules & Cliffs
You need to have the right mechanisms in place to make sure your advisory board members contribute to the startup, without you losing your shares. Vesting schedules and cliffs are one of the best ways to implement such mechanisms.
Determine What Their Level of Input will be
Of course, you want to determine exactly how much your advisors can contribute to your business processes. Make it clear what their job description will be, and how much power they have over your business. Think about how much you want to involve them in the regular operations, and how much leeway they have to alter these procedures without your involvement.
Create Clear Confidentiality Clauses
One of the biggest risks with health tech startups is that someone will copy your innovations and create their own company. To prevent this, have your advisory board sign strong confidentiality and non-disclosure agreements. These should lay out what information can be shared with whom, and what should be kept strictly private.
The advantage of a trusted advisory board is that they will consistently be on this journey with you without being overly influenced by economic interests or too much in love with the features you’ve been thinking about all day. Engage in proactive communication, aim always to let them know what you’re thinking, what your next steps are, and where your challenges lie. They might just have the solution for you at hand.