“Dylan [Byrne] advised us to set up our accounts that way from the start. That meant the tracking that’s necessary for the grant isn’t a big deal for us – we already had those procedures in place. We could easily meet the reporting and auditing requirements.”
Byrne adds another way the advisory board changed Liquid State.
International start-ups often try to keep their intellectual property, revenues and costs in different companies, in a bid to protect the important things should their business hit some hurdles.
But that has costs.
“We suggested a simple structure, because it’s a better exit strategy,” he says. “It’s easier to unwind. If you’re a company coming in and wanting to invest, you’re right to ask what exactly you’re buying. It creates a whole lot of work. And we can manage the risks another way, while keeping the structure quite simple.
“One of the other advisers, a lawyer who’s done a heap of venture capital and private equity work, was very clear on this. He said if you make your structure too complicated, there are problems down the track. It was great to have that expertise.”
Ultimately, Andrews says, Liquid State was lucky in that both he and his co-founder were older, and have been involved in business for a long time. Andrews himself owns a Queensland-based publishing company, which he’s taken a step back from to focus on Liquid State.
“When you’re bootstrapping a company, you have very little money for anybody,” he says. “These guys are helping us structure our business in anticipation of success. But it’s risky being involved in start-ups, and that can be a deterrent for people who hold such expertise.
“We’re lucky that we’ve been in business for 20 years. Whenever we’re speaking with other businesspeople, we tend to speak the same language, and that’s not always the case with companies like ours, who can be led by young or inexperienced people. They can have a great idea, but not much business acumen.”
Liquid State’s founder leveraged their existing relationships. All their advisers were acquaintances before they joined the board.
That was the case with Byrne, who was introduced to Andrews through a work colleague.
“We had a lot of rapport, and without trying, we became friends.
“Then one day he rang me up and said he had an important question to ask me. When he explained the advisory board, I said yes in an instant. He already had my trust.”
Sometimes, the advisory board’s counsel can rub against the grain. But Andrews says it’s worth it.
“All the key players in the advisory board are super-experienced with much bigger companies and with far more international outlooks than we have inside our company. Even though sometimes it’s an uneasy fit – we’re an ultra-small company with big, international ideas – it was absolutely necessarily for what we’re building.”
Myriam Robin is a reporter for SmartCompany and its sister site LeadingCompany. She has degrees in economics, international studies and journalism. She likes writing about businesses taking risks and doing new things.
