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For many non-technical founders, the biggest roadblock to launching a startup isn’t lack of ideas, it’s lack of code. You have the vision, the business model, and maybe even early customer validation, but without a technical cofounder, you’re stuck.

Investors also know this. One of the most common questions they’ll ask is: “Who’s building this?” If you don’t have a strong answer, it can be a red flag.

So, how do you find the right technical cofounder? Someone who can not only build your product, but also commit to scaling a company with you? This guide will walk you through the process, from where to look to how to structure the partnership.

Why do you need a technical cofounder?

Not every startup requires a technical cofounder, but for most tech-driven startups, having one can:

• Validate feasibility: Ensure your idea is technically possible before wasting time and money.
• Speed up development: Build faster without relying on outsourced developers.
• Improve investor appeal: Many investors hesitate to back solo, non-technical founders without an in-house technical leader.
• Lower costs: Hiring a CTO or outsourcing development can be expensive; a cofounder is an equity-based partnership.

💡If your product is software-heavy (SaaS, AI, marketplaces, fintech), a technical cofounder is likely a must.

‍Step 1: Clarify what you're looking for

‍Before searching, define exactly what kind of technical cofounder you need.

• What tech stack do you need? Web app? Mobile? AI?
• What skills are required? Frontend, backend, full-stack, machine learning?
• What stage are you at? Idea stage? MVP? Early traction?
• What level of commitment? Full-time? Part-time until funding?

If you’re unsure, talk to technical advisors or developers to refine what skillset is best for your startup.

‍Step 2: Look in the right places

‍Finding the right technical cofounder isn’t just about networking: it’s about showing up where they are.

‍Online platforms

• CoFoundersLab: A matchmaking site for startup cofounders.
• Indie Hackers: A community of builders, great for networking.
• YC Cofounder Matching: Find a cofounder through Y Combinator’s network.
• YC Startup School: Connect with other founders, some of whom are technical.
• AngelList: Many engineers and startup-minded developers are here.
• LinkedIn & X: Post about your search, share insights, and engage with engineers in your industry.

In-person networking

• Hackathons: Great places to meet developers who love to build fast.
• Meetups & Tech Conferences: Look for events on AI, web development, or specific programming languages.
• Startup accelerators & founder groups: Even if you don’t join an accelerator, their events can be great for networking.

🎯Pro tip: Don’t just say “I need a tech cofounder.” Be specific about what you’re building and why it’s exciting.

‍Step 3: Make yourself a strong business cofounder

‍Developers aren’t just looking for any project. They want to work with someone who can execute and bring value beyond code.

To attract a great cofounder, you need to prove that you bring something substantial to the table:

• Market validation. Show you’ve done customer research, identified demand, or secured early signups.
• Business traction. A pre-sell campaign, email waitlist, or strong industry interest can signal viability.
• Fundraising ability. If you’ve raised or are capable of raising funding, that’s attractive.
• Clear vision & strategy. Engineers want to build something meaningful, not just write code.

The more progress you’ve made on your own, the easier it is to convince a technical cofounder to join.

‍Step 4: Start working together before signing an agreement

‍A common mistake is rushing into a cofounder relationship without testing how well you collaborate. Instead:

• Work on a small project together first: A prototype, feature, or market test.
• Set expectations early: Talk about equity, vision, and long-term commitment.
• Assess compatibility: Do you communicate well? Can you handle disagreements?

Cofounder breakups can be as messy as a divorce. 💔 Take time to ensure it’s a good fit before making it official.

‍Step 5: Structure the partnership (equity & roles)

‍Once you’ve found the right person, define roles and ownership.

‍How much equity should a technical cofounder get?

‍Peter Walker, Carta’s Head of Insights, recently shared typical cofounder equity splits from 2022-2024.

Equity splits depend on the number of cofounders, the level of contribution, and the stage at which they join. Based on the data:

‍For two founders:

• 50/50 split. Around 41% of two-founder teams divide equity equally, especially if both contribute equally to the startup.
• 60/40 or 55/45 split. Common when one founder has made more progress or brought in significant resources before the other joined.
• 70/30 or higher imbalance. Less common, but seen when one founder provides most of the capital or work.

For three founders:

• 33/33/33 split. About 21% of three-founder teams divide equity equally.
• 40/30/30 split or similar. Happens when one founder contributes more heavily in terms of capital, traction, or technical expertise.
• Lower ownership for late joiners. If a third cofounder joins significantly later, their share may be smaller, such as 10-15%.

Use vesting to protect the team

‍No matter the equity split, all cofounders should agree to a 4-year vesting schedule with a 1-year cliff. This ensures that equity is earned over time and protects the team in case someone leaves early.

For structuring agreements, consider using platforms like:

• Carta – Equity management for startups.
• Clerky – Legal documents for startup founders.

💼 Investor insight: Investors want to see clarity in your cofounder dynamic. A clear division of responsibilities and a fair equity split are green flags.

‍Common mistakes to avoid

‍🚫 Waiting too long to find one. If your startup is tech-heavy, finding a cofounder should be a priority.
🚫 Offering equity without a vesting schedule. Protect yourself with a standard vesting agreement.
🚫 Focusing on skills over alignment. A brilliant engineer isn’t helpful if you have mismatched values or work ethics.
🚫 Lacking clear expectations. Talk about roles, vision, and commitment before making it official.

‍Conclusion

‍Finding the right technical cofounder is about more than just filling a role, it’s about building a partnership that can turn your vision into reality. By clarifying what you need, showing clear progress, and structuring a fair agreement, you can attract the right person to join your journey. Remember, the stronger your foundation, the more appealing your startup will be to both cofounders and investors. Take the time to build it right.

🚀Looking to connect with the right investors once your technical team is in place? Capwave AI helps founders like you build investor relationships that count. Sign up today and take the next step in your startup journey.

For startups, achieving product-market fit (PMF) is like finding the holy grail. It’s the moment when your product resonates so deeply with your target market that growth feels inevitable. Investors ask about it, advisors stress its importance, and founders chase it relentlessly. But what exactly is product-market fit, and how do you know when you’ve reached it?

In this guide, we’ll break down the definition, signs, and strategies for achieving product-market fit, along with examples and actionable steps to help your startup get there.

What is product-market fit? 🎯

Coined by venture capitalist Marc Andreessen, product-market fit is the point where:

• You’ve built a product that solves a real problem for a specific group of people.
• Customers are not just willing but eager to use (and pay for) your product.
• Demand for your solution is growing organically, often through word of mouth.

Simply put, product-market fit happens when your product becomes an essential solution for your target audience. It’s a need, not just a “nice to have.”

‍Product-market fit is critical because it signals to investors that your product solves a real problem for a specific audience, and that customers are willing to pay for it. It’s the strongest indicator of a startup’s potential to grow and scale.

Achieving PMF reduces risk, attracts funding, and provides a clear foundation for scaling operations. Without it, attempts to grow too early often result in wasted time, money, and missed opportunities.

‍When should you have it?

⏳While every startup’s journey is unique, achieving product-market fit generally follows these stages:

‍Months 0-6: Problem discovery & validation

‍(For deep-tech, enterprise, or regulated industries, this phase may take up to 12 months.)

• Conduct customer interviews, define your ICP.
• Test early concepts (landing pages, no-code MVPs).
• Identify initial demand through pre-sales or waitlists.

Months 6-12: MVP development & early traction

‍(For B2B SaaS or complex tech products, this may stretch to 18 months.)

• Build & launch an MVP with core features.
• Onboard early adopters, track engagement & retention.
• Iterate based on feedback, adjust positioning if needed.

Months 12-24: Refinement & traction

‍(Consumer apps or viral products may hit traction faster, while deep-tech and enterprise may take longer.)

• Focus on improving customer retention & organic referrals.
• Optimize pricing & product-market fit indicators.
• If traction is weak, reassess market fit or pivot.

Months 24-36: PMF signals emerge

‍(Some companies take 3+ years to reach PMF. This is normal!)

• Consistent growth in revenue, retention, & inbound demand.
• Lower CAC, repeatable acquisition strategies.
• Increasing investor & partner interest.

Months 36+: Scaling beyond PMF

‍(Some startups take 5+ years to truly scale, depending on market conditions.)

• Expand marketing, sales, & hiring.
• Optimize unit economics, raise growth capital if needed.
• Explore new markets, product expansions, or partnerships.

💡 Check out Guillermo Flor’s post on LinkedIn for proof that the PMF timeline is not a one-size-fits-all. 

‍How do you know if you’ve reached PMF? 🏆

Some of the signs:

• Strong retention: Customers keep coming back because they find your product indispensable.
• High demand: Sales, signups, or waitlists are growing faster than you can keep up with.
• Customer enthusiasm: Users provide glowing feedback, referrals, and even unsolicited praise.
• Revenue growth: You’re making consistent sales or seeing repeat purchases.
• Market buzz: Your product is being talked about organically in your industry or community.

Metrics to watch for:

• Retention rate: A retention rate of over 30% is often a good sign for consumer products.
• Net Promoter Score (NPS): If your NPS is above 50, it indicates strong customer satisfaction.
• Churn rate: A low churn rate signals that customers are sticking around because they see value.

🎯Benchmark: The Sean Ellis test for product-market fit asks: What percentage of your users would be “very disappointed” if they could no longer use your product? A score of 40% or higher is a strong indicator of PMF.

‍How to achieve it 🥇

Know your customer deeply

• Conduct customer interviews and surveys to understand their biggest pain points.
• Build a detailed Ideal Customer Profile (ICP) to focus your efforts on the right audience.

Solve a specific problem

‍Instead of trying to please everyone, focus on solving one key problem exceptionally well. Products that aim to do everything often end up doing nothing effectively.

‍Iterate based on feedback

‍Use early adopters and beta testers to refine your product. Act on feedback to improve usability, eliminate unnecessary features, and focus on what your audience values most.💡Pro tip: Tools like Typeform and Hotjar can help you collect and analyze user feedback.

‍Track the metrics that matter

‍Identify KPIs (key performance indicators) that align with your business model. For SaaS startups, this could be monthly recurring revenue (MRR) or churn rate. For e-commerce, it might be repeat purchase rate.

‍Leverage early traction to iterate

‍If you have a small but loyal user base, study them closely. What keeps them engaged? Why do they stick around? Double down on what’s working.

‍Test your messaging

‍Your product might be great, but poor messaging can prevent you from reaching PMF. Continuously test your value proposition, website copy, and marketing strategies to ensure they resonate with your audience.

‍Common myths 🚧

1. “You’ll know it when you have it.”
   In reality, PMF isn’t always obvious. It’s more of a gradual process than a sudden breakthrough.
2. “You need PMF before you raise funding.”
   While it helps, many pre-seed and seed-stage startups raise funds to achieve PMF. Showing progress toward PMF can still attract investors.
3. “Once you have PMF, you’re set.”
   Markets change, competitors emerge, and customer needs evolve. Even after achieving PMF, staying in tune with your audience is crucial.

‍What to do once you’ve achieved PMF 📈

‍Once you’ve reached it, the next steps are all about scaling:

1. Focus on growth: Ramp up your sales, marketing, and customer acquisition efforts.
2. Expand your team: Bring on specialists to handle the growing demand.
3. Prepare for fundraising: Use your traction and metrics to build a compelling story for investors. Use platforms like Capwave AI to find the right investors.
4. Streamline operations: Ensure your business can handle the increasing volume of customers without sacrificing quality.

‍Conclusion

‍Product-market fit is the foundation of every successful startup. It’s the point where your product stops being a “nice-to-have” and becomes a “must-have” for your customers. By deeply understanding your audience, solving real problems, and iterating based on feedback, you’ll set your startup up for long-term success.

Whether you’re working toward PMF or scaling after achieving it, Capwave AI is here to support you. Sign up today to connect with investors and resources that can help you take your next step.

Investors need to see traction early, and a well-run beta test is one of the best ways to demonstrate real user interest, validate your product, and build credibility before raising funds. That’s why beta testing is one of the smartest moves you can make before a full-scale launch. The right beta test can validate your idea, refine your product, and even attract early investors.

In this guide, we’ll walk through how to run a successful beta test, what mistakes to avoid, and how to use your beta to impress investors (even if you have no revenue yet).

What is beta testing and why does it matter? 🧪

Beta testing is the process of releasing your product to a small group of users before a public launch. These early testers provide real-world feedback, helping you:

• Identify bugs and usability issues
• Understand customer behavior and needs
• Validate your market fit with real users
• Build early traction and credibility for fundraising

💡 Slack started as an internal tool at a gaming company. Their beta testing process helped them realize the real product was team communication, not gaming. Today, Slack is worth billions.

‍Step 1: Define your beta testing goals

‍Before inviting users, get clear on what you want to learn. Are you testing:

• Usability? (Do users understand the product?)
• Technical stability? (Does the product work smoothly?)
• Feature validation? (Which features do users actually care about?)
• Conversion paths? (Do beta users take the actions you expect?)

🎯 Pro tip: Choose one primary goal to keep the test focused.

‍Step 2: Build a beta tester group

‍Your beta users should match your ideal customer profile. You don’t need 100 beta testers, just around 10-20 active ones that match your target audience. Start with:

1. Existing network – Friends, colleagues, LinkedIn connections
2. Online communities – Reddit, Indie Hackers, Facebook groups
3. Beta testing platforms – Betalist or Product Hunt
4. Landing pages & waitlists – Tools like Carrd or Tally make it easy to collect signups

💡 Dropbox’s beta strategy required users to invite friends to get access, creating a viral waitlist effect.

‍Step 3: Set up a feedback loop

‍Feedback is the most important part of a beta test. Structure it well:

• Recruitment: Read this article for a playbook in email personalization
• Surveys & forms: Use Typeform or Google Forms for structured feedback
• Virtual user interviews: One-on-one calls for deep insights. Bring along a virtual notetaker like Fathom for advanced insights
• Analytics tracking: Stay organized with tools like Notion, use Hotjar for heatmaps, or Mixpanel for user behavior
• Slack or Discord groups: Create a space for open discussion

💡 Instead of vague questions like Did you like the product?, ask:

• What problem were you hoping this product would solve for you?
• Which features were the most useful to you?
• What alternative solutions or competitors have you used? How does this compare?
• If you could add any new feature, what would it be?
• What’s the most frustrating part of using this product?
• What did you expect it to do that it didn’t?
• Would you recommend this to a friend? Why or why not?

Step 4: Iterate and improve

‍Now, it’s time to act on the feedback. Prioritize based on:

• Critical bugs: Fix anything that blocks core functionality.
• UX issues: If users are confused, rethink your onboarding and design.
• Feature validation: If users don’t care about a feature, consider removing it.
• Focus on the value add: Double down on what users love most. Identify the features that provide the most value and make them even stronger. Your product needs to solve a real problem in a meaningful way.

💼 Investor insight: Showing how you’ve iterated based on beta feedback makes a great story for pitch decks. Investors love data-driven improvements.

‍Step 5: Use beta results to impress investors

‍Even if you have no revenue yet, your beta results can be powerful proof of traction. Here’s how to frame it:

• User growth: "We had 75+ beta signups in 3 weeks."
• Engagement: "80% of beta users returned within 7 days."
• Feedback: "75% said they would pay for the product."

💼 Include beta stats in your investor pitch: tools like Capwave AI can help you refine your deck.

‍Common mistakes to avoid 🚫

• Skipping a clear goal: if you don’t define what success looks like, you’ll drown in feedback.
• Testing with the wrong audience: your mom loves your startup, but she’s not your target customer.
• Not collecting usable data: avoid vague feedback like “It’s cool.” Ask specific questions.
• Launching too late: you don’t need to be perfect. Test early, test often.

Capwave’s top picks

• Typeform – Create seamless surveys and forms
• Product Hunt – Engage in discussions, launch your product, and gain early traction
• Notion – Organize beta testing feedback and track iterations
• Fathom – Record and analyze user interviews to capture key insights
• Slack – Create a community for beta testers and facilitate real-time discussion

🚀 Need help refining your investor pitch based on beta feedback? Capwave AI makes it easy to sharpen your deck, and connect with the right investors who want to fund you. Sign up today to start your fundraising journey smarter.

Introduction

When pitching to VCs, every detail matters. Beyond your business plan and metrics, VCs are constantly observing subtle cues — "micro signals" — to evaluate whether you’re the right fit for their investment. These signals can make or break your chances of securing funding. In this blog, we’ll uncover the ways VCs assess founders and how you can ensure you’re sending the right message.

1. Overcomplicating your ideas & using too much jargon 🚩

If you struggle to articulate your vision, business model, or market opportunity, VCs may question your ability to lead effectively and inspire others.

💬 Examples:

• When asked about your revenue model, you provide a vague response like, “We’re still figuring it out.”
• Overloading slides with technical jargon without explaining how it ties to the business problem.

✅How to avoid it:

• Practice delivering your pitch concisely and confidently.
• Anticipate tough questions and prepare clear, data-backed answers.
• Avoid jargon or overly technical explanations; make your pitch accessible.
• Check out Capwave AI’s free Pitch Deck Template.

2. Overpromising or avoiding potential risks 🚩

‍Unrealistic claims about growth or minimizing challenges can make VCs doubt your credibility. Investors want honesty, not perfection.

‍💬 Examples:

• Claiming you’ll dominate 50% of the market within the first year without explaining how.
• Downplaying major risks, such as regulatory hurdles, when directly asked.

✅ How to avoid it:

• Be transparent about risks and how you plan to mitigate them.
• Use realistic projections supported by data and industry trends.
• Focus on progress and potential rather than unattainable guarantees.

3. Ignoring the competitive landscape 🚩

‍💬 Examples:

• Dismissing competitors as irrelevant or claiming you have no competitors.
• Not identifying how your solution is differentiated in a crowded market.

✅ How to avoid it:

• Acknowledge competitors and show how your solution is uniquely positioned.
• Be prepared to discuss how your business competes or collaborates in the ecosystem.

3. Bad team dynamics 🚩

‍VCs observe how founders interact with co-founders and team members. Disrespect or lack of alignment can indicate potential leadership issues.

‍💬 Examples:

• Interrupting your co-founder during a pitch or disagreeing on a critical point in front of investors.
• Struggling to articulate why your team’s skills complement each other.

✅ How to avoid it:

• Present a united front with your team.
• Highlight how your team’s complementary skills drive success.
• Be prepared to address gaps and how you plan to fill them.

4. Your pitch deck is poorly designed 🚩

‍A visually unappealing or disorganized pitch deck can signal a lack of preparation or professionalism. VCs rely on your deck to quickly grasp your business, so clarity and design matter. 

💬 Examples:

• Using overly cluttered slides that are overwhelming or irrelevant visuals.
• Inconsistent branding, such as mismatched fonts or colors.
• Skipping critical slides, like go-to-market strategy or financials.
• Check out 31 slide examples on CrunchBase.

✅ How to avoid it:

• Use clear and concise visuals that complement your narrative.
• Stick to a professional, cohesive design style.
• Ensure every slide has a purpose and contributes to your story.

5. Unconvincing market size slide (TAM) 🚩

‍VCs scrutinize your Total Addressable Market (TAM) to evaluate the potential of your business. A weak market size calculation undermines your credibility and suggests you don’t fully understand your industry.‍

💬 Examples:

• Presenting a "top-down" market size estimate, like citing an $800 billion global market without tying it to your specific opportunity.
• Overestimating your market share potential without justifying how you’ll achieve it.

✅ How to avoid it:

• Break down your market into TAM, SAM (Serviceable Available Market), and SOM (Serviceable Obtainable Market). 
• Use data from reputable sources to back up your assumptions.

7. Failure to address timing 🚩

💬 Examples:

• Failing to explain why now is the right time for your business or market entry.
• Overlooking emerging trends or shifts that justify your business model.

✅ How to avoid it:

• Highlight market trends or recent shifts that make your solution timely.
• Discuss any momentum or traction as proof of timing alignment.

6. Inconsistencies in your story 🚩

‍If your pitch, projections, or responses contradict each other, VCs may see it as a lack of preparation or understanding.

‍💬 Examples:

• Stating one market size in your pitch deck but giving a completely different figure during Q&A.
• Changing the timeline for milestones between meetings without explanation.

✅ How to avoid it:

• Align your pitch deck, verbal presentation, and financials.
• Rehearse with team members to ensure consistency.
• Address discrepancies proactively if they arise.

7. You have a defensive or closed-off attitude 🚩

‍VCs value founders who are coachable and open to feedback. A defensive or dismissive attitude can be a dealbreaker.

‍💬 Examples:

• Responding with, “I’ve already thought of that” instead of engaging with constructive feedback.
• Dismissing market concerns raised by investors without providing a thoughtful response.

✅ How to avoid it:

• Welcome questions and feedback with an open mind.
• Frame your responses as a discussion rather than a defense.
• Show a willingness to adapt and learn from experts.

8. Weak understanding of financials 🚩

‍An inability to explain your revenue model, unit economics, or key financial metrics suggests you’re not ready to run a scalable business.

‍💬 Examples:

• Hesitating when asked about your CAC (Customer Acquisition Cost) or LTV (Lifetime Value).
• Providing inconsistent numbers between your deck and verbal responses.

✅ How to avoid it:

• Know your numbers inside and out, from CAC (Customer Acquisition Cost) to LTV (Lifetime Value).
• Be prepared to explain how financials tie into your growth strategy.
• Share plans for improving metrics over time.
• Memorize Capwave AI’s free Metrics to Know Cold Guide.

9. Inflating your background 🚩

‍While confidence is key, exaggerating your experience or achievements can backfire and harm your credibility. VCs value authenticity and transparency over embellishment.

💬 Examples:

• Misrepresenting degrees, certifications, or industry experience.

✅ How to avoid it:

• Be truthful about your role in past successes and the lessons you learned.
• Focus on highlighting the skills and experiences that directly relate to your startup’s success.
• If there are gaps in your expertise, demonstrate how you’ve built a strong team to complement your background.

Conclusion

‍Micro signals play a significant role in how VCs evaluate founders, often influencing decisions before major aspects of your pitch are even considered. By understanding these subtle cues and proactively addressing them, you can position yourself as a confident, credible, and investable founder. Remember, VCs aren’t just investing in your business — they’re investing in you. Enjoyed these tips? You can find a full masterclass packed with valuable insider insights from a capital raising expert on the Capwave platform.

Introduction

In a world where countless startups are competing for attention, making your product stand out isn’t just a nice-to-have, it’s essential for survival. Differentiation is the key to winning over customers, investors, and the market at large. But how do you set yourself apart when competitors seem to have similar offerings? In this blog, we’ll explore practical strategies to position your product as a unique, must-have solution.

1. Understand your competitors inside and out

To stand out, you need to know what you’re up against. Understanding your competitors’ strengths, weaknesses, and positioning helps you identify gaps and opportunities.

How to do it:

• Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) for your top competitors.
• Analyze their customer reviews to uncover common complaints or unmet needs.
• Study their messaging and branding across all channels (website, social media accounts, etc) to find ways to differentiate your voice.

2. Define your unique value proposition (UVP)

‍Your UVP is what makes your product different and better than others in the market. Without it, your offering may blend into the noise.How to do it:

• Ask yourself: What specific problem does your product solve better than anyone else?
• Focus on outcomes: How does your product improve your customers’ lives or businesses?
• Make it clear and concise. Your UVP should be memorable and easy to understand.

💬Example: Slack’s UVP is its ability to streamline workplace communication, saving time and reducing email overload.

‍3. Double down on customer experience

‍A great customer experience (CX) can turn customers into loyal advocates. It’s a powerful differentiator that competitors can’t easily replicate.

‍How to do it:

• Simplify onboarding to help users see value quickly.
• Offer responsive, human-centered support to address customer concerns.
• Continuously collect feedback and iterate to exceed customer expectations.

4. Innovate beyond features

‍Competing on features alone is a race to the bottom. Innovation can set you apart by creating a product experience that competitors can’t match.How to do it:

• Focus on usability: Is your product more intuitive or enjoyable to use?
• Incorporate unique design elements or branding.
• Explore adjacent solutions or complementary features that provide added value.

💬Example: Apple stands out not just for its products but for its design, ecosystem, and user-friendly interfaces.

‍5. Highlight social proof

‍Customers trust other customers more than they trust brands. Social proof builds credibility and trust for your product.

‍How to do it:

• Showcase testimonials, case studies, or reviews prominently on your website.
• Leverage influencer endorsements or partnerships within your niche.
• Highlight user metrics (e.g., “Over 10,000 teams use our software”) to build authority.

6. Build a strong brand identity

‍A memorable brand can differentiate your product even in a crowded market. People don’t just buy products; they buy stories and values.

‍How to do it:

• Develop a consistent visual identity (logo, colors, fonts) that resonates with your target audience.
• Create a compelling brand story that connects emotionally with your customers.
• Communicate your mission and values authentically.

💬Example: Patagonia’s brand identity revolves around environmental activism, which resonates deeply with its customer base.

‍7. Focus on niche markets

‍Trying to appeal to everyone often leads to generic offerings. Targeting a specific audience allows you to become the go-to solution for that group.

‍How to do it:

• Identify underserved segments within your market.
• Tailor your messaging and features to meet their unique needs.
• Build a community around your product by engaging directly with niche users.

💬Example: Bumble differentiated itself in the crowded dating app space by focusing on women making the first move.

‍Conclusion

‍Differentiating your product in a competitive market requires a deep understanding of your customers, competitors, and unique strengths. By crafting a compelling UVP, prioritizing customer experience, and building a strong brand, you can create a product that doesn’t just compete — it stands out. Remember, differentiation is an ongoing process; continue to adapt and innovate to stay ahead of the curve.

Introduction

Building a startup is no small feat, and having the right support system can make all the difference. A board of advisors offers expertise, connections, and credibility, helping founders navigate challenges and make informed decisions. In this blog, we’ll explore what a board of advisors is, why every startup should consider building one, how to find the right advisors, and how to structure their compensation, including a breakdown of equity benchmarks.

What is a board of advisors?

A board of advisors is a group of experienced professionals who provide guidance and strategic insights to your startup. Unlike a board of directors, advisors don’t have legal responsibilities or decision-making power, making their role more flexible and informal. Some typical characteristics:

• Typically includes industry experts, seasoned entrepreneurs, or investors.
• Focused on advising on specific areas such as fundraising, scaling, or product strategy.
• Offers guidance without the legal and fiduciary obligations of a formal board of directors.

Why do startups need a board of advisors?

Having a board of advisors can bring immense value to your startup:

1. Strategic guidance: Advisors provide specialized knowledge in areas where your team may lack experience.
2. Credibility boost: A strong advisory board signals to investors and stakeholders that your startup is serious and well-connected.
3. Network access: Advisors open doors to valuable connections, including potential customers, partners, and investors.
4. Fundraising support: Advisors can help refine your pitch, provide warm introductions, and validate your business to VCs.

How to find the right advisors

The success of your advisory board depends on choosing the right people. Here’s how to find and recruit them:

• Identify your needs: Determine which areas of your business need the most guidance (e.g., marketing, technology, operations).
• Leverage your network: Start by reaching out to mentors, industry contacts, or investors who align with your needs.
• Attend events: Networking at industry events or startup competitions can connect you with potential advisors.
• Use online platforms: Platforms like LinkedIn or networking groups like The Fourth Effect and Angel Capital Association can help you identify and approach experienced professionals.

When reaching out, be clear about your expectations, the time commitment involved, and the value they’ll gain by joining your journey.

How to structure advisor compensation

Compensating your advisors fairly is crucial to building a strong and committed board. Equity is the most common form of compensation for advisors in startups. A graph shared by Peter Walker on LinkedIn outlines typical equity benchmarks for advisors based on their involvement and the startup’s stage: 

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Key takeaways from the graph:

• Early-stage startups: Advisors typically receive higher equity percentages due to higher risks and fewer cash resources.
• Later-stage startups: Equity percentages decrease as startups gain traction, but advisor roles become more specialized.
• Strategic vs. general advisors: Strategic advisors with niche expertise or extensive networks command higher equity stakes.

Tips for offering advisor equity

1. Time-based vesting: Implement vesting schedules (e.g., 2-3 years) to ensure advisors remain engaged.
2. Role-specific adjustments: Adjust equity offers based on the depth of involvement—a hands-on strategic advisor may warrant more equity than a passive advisor.
3. Market benchmarks: Use benchmarks to ensure your equity offers are competitive yet sustainable.
4. Set clear expectations: Define specific roles, responsibilities, and deliverables tied to equity compensation.

Conclusion

A well-structured board of advisors is a game-changer for startups, providing the guidance, credibility, and connections needed to thrive. By understanding what advisors bring to the table, finding the right people, and compensating them fairly, you can set your startup up for long-term success. Leveraging tools like equity benchmarks ensures that your advisor relationships are both strategic and sustainable—benefiting your team, your advisors, and your investors alike.