Introduction
At different stages of maturity, start-ups draw on two forms of external support: strategic advisors, who advise on a time-limited, topic-specific basis without any formal governance function, and advisory boards, which support founders as a permanent, informal body and in some cases assume control functions. Both differ markedly from a supervisory board, a formal legal body that becomes relevant mainly in later growth phases.
Key Takeaways
- From Series A onwards, nearly two thirds of all German start-ups have an advisory board; around one third of these are “strong” boards with the power to remove the management.
- An advisory board typically consists of four to five members, usually with two founder representatives and a number of investor representatives that grows with start-up maturity.
- Strategic advisors should, as a rule, be paid in cash rather than in shares – advisors who insist on equity should be treated with caution.
- A clear allocation of responsibilities between management and advisory board, a deliberately small board size and transparent conflict-of-interest rules are the most important levers for a well-functioning body.
- Well-prepared, focused advisory board meetings with materials shared early and a clear structure are more effective than long, unprepared discussions.
Strategic Advisors vs. Advisory Boards
Strategic advisors provide project-based support on specific occasions – for example in the event of deviations from plan, strategic decisions, upcoming financing rounds, international expansion or a planned exit. Important: advisors should be genuinely senior, references should be obtained personally, and remuneration should be in cash – not in equity. If an investor offers a participation only in conjunction with an advisory agreement through which it refinances its investment, scepticism is warranted. Advisory boards, by contrast, are more formally organised, meet regularly, usually consist of four to five members with different areas of expertise and, besides their supporting role, also have a certain control function. Their added value lies in the fact that board members – especially investor representatives with their own carry interest – have a direct financial interest in the start-up’s success and therefore provide critical yet constructive support, share responsibility for decisions and open up access to networks and expertise that a founding team would otherwise have to build up over years. What matters is that the advisory board brings competencies that genuinely help the company and the founders, rather than limiting itself to a pure control function.
Facts on Advisory Boards in German Start-ups
Current market data (OLNS study “Advisory Boards in German Start-ups”) show: from Series A onwards, almost two thirds of all German start-ups have an advisory board. An advisory board usually consists of four to five members. Regardless of the stage of maturity, there are usually two founder representatives, while the number of investor representatives grows from round to round; one independent member is also common. This “numerical” limit on board size requires strong lead investors who are willing to pool or share seats.
Governance Hot Topics
Four topics are decisive for a well-functioning advisory board relationship:
- Clear allocation of responsibilities between management and advisory board – unclear responsibilities (e.g. vaguely defined “material decisions”) lead to deadlock or liability risks for board members; the solution lies in governance rules set out in writing, preferably in the shareholders’ agreement, with narrowly drawn, clearly defined veto rights.
- Keep the board deliberately small – with every financing round the temptation grows to give new investors a seat; a clear rule on nomination rights and mechanisms that remove seats from diluted investors prevent an oversized, deadlock-prone body.
- Conflicts of interest – the dual role as investor representative and board member can lead to conflicts between company and investor interests; an appropriate board composition with independent members, written conflict rules and abstention duties in cases of bias provide a remedy.
- Remuneration – early and transparent clarification of advisory board members’ remuneration (cash, symbolic or in equity).
Panel
Start-up Lounge Vol. 3 · Session held on 7 October 2025
boost4S: Dr. Ulrich Eisele & Terje Noevig · GLNS: Georg Lindner & Dr. Konrad Hildebrand
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