How much equity for a Super Advisor?

#1

Post by BlueSkies » Mon, Mar 08, 2010, 4:18 PM UTC

I'm in the process of starting a company dealing with social media and marketing. I've been working with a marketing advisor on a trial basis for several months. He has turned out to be an extraordinary asset to my efforts. Unfortunately he isn't available for hire, but he would like to continue in an advisory role giving me about 10 hours per month. Besides his advice and research, he will be able to make some key introductions to potential customers and investors.

How much equity should I offer him, presumably vested over 4 years?

More background: I am currently a single person operation, not yet incorporated (soon) or funded.

Thanks for any advice you can offer.

Re: How much equity for a Super Advisor?

#2

Post by jacquesm » Mon, Mar 08, 2010, 4:26 PM UTC

Consider finding an alternative that you can hire instead of offering equity.

Alternatively allow him to put his money on the table to buy in as a founder.

Just advice and contacts unless they're really extraordinary (which you're in a position to evaluate, you say they are but based on how large a sample is that ?), make-or-break is best hired.

If he's willing to become a co-founder that means he's in for the long haul, that changes things considerably.

Equity should be exchanged for funding or a very strong commitment. 10 hours per month puts him compared to a full-timer that brings money to the table in the much-less-than-1% bracket, and likely he won't be interested in that.

Re: How much equity for a Super Advisor?

#3

Post by icey » Mon, Mar 08, 2010, 4:31 PM UTC

jacquesm wrote: post #2

Consider finding an alternative that you can hire instead of offering equity. Alternatively allow him to put his money on the table to buy in as a founder. Just advice and contacts unless they're really extraordinary (which you're in a position to evaluate, you say they are but based on how large a sample is that ?), make-or-break is best hired. If he's willing to become a co-founder that means he's in for the long h…

Jacques, have you read "How to Get Rich" by Felix Dennis? Between this comment and the one where you mentioned using the equity on your house to buy out your partners from ww.com it seems like you hold a similar philosophy to his. Which is to say, "keep as much of the pie as possible".

If so, I'd be really interested in hearing your thoughts on it.

Re: How much equity for a Super Advisor?

#4

Post by jacquesm » Mon, Mar 08, 2010, 4:37 PM UTC

icey wrote: post #3

jacquesm wrote: post #2

Consider finding an alternative that you can hire instead of offering equity. Alternatively allow him to put his money on the table to buy in as a founder. Just advice and contacts unless they're really extraordinary (which you're in a position to evaluate, you say they are but based on how large a sample is that ?), make-or-break is best hired. If he's willing to become a co-founder that means he's in for the long h…

Jacques, have you read "How to Get Rich" by Felix Dennis? Between this comment and the one where you mentioned using the equity on your house to buy out your partners from ww.com it seems like you hold a similar philosophy to his. Which is to say, "keep as much of the pie as possible". If so, I'd be really interested in hearing your thoughts on it.

I haven't read that book, but I believe in partners that are 100% committed. Having a part-time commitment means that you have a partner that you will not be able to rely on when you really need them, and that's best reserved for people that bring a one-time effect, such as investors.

Their role is money + advice, someone that just gives advice can be hired or an alternative can be found.

I think plenty of people look at equity as a way to get off the ground without any costs at all, but long term that may turn out to be very expensive, it may in fact create trouble between other people that would like to commit full-time that you'll have to convince of the value this guy is bringing to the table.

Keeping as much of the pie as long as possible is probably closer to my philosophy, and buy back when you feel that commitment is flagging.

Re: How much equity for a Super Advisor?

#5

Post by aditya » Mon, Mar 08, 2010, 4:46 PM UTC

Good advisors are worth 0.5-1.0% of the company. Much more would dilute your option pool (if you're going to end up raising VC eventually.)

Re: How much equity for a Super Advisor?

#6

Post by tbgvi » Tue, Mar 09, 2010, 1:45 AM UTC

Out of curiosity, did he ask for equity? I didn't catch that in your summary, it seemed like he's willing to give you ~10 hours a month.

Either way I'd see if he could make those introductions first, proving that he's good partner. If he can't make the introductions or won't until he has equity, then I would be apprehensive about a partnership.