Big News: FounderDating is joining OneVest to build the largest community for entrepreneurs. Details here
Latest Notifications
You have no recent recommendations.
Name
Title
 
MiniBio
FOLLOW
Title
 Followers
FOLLOW TOPIC

Question goes here

1,300 Followers

  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur

What are fair expectations for an advisor who's been given equity?

I've been seeing a lot of people saying advisors typically take .25% to 1%. What are fair expectations in return?

10 Replies

Hunter Hayes
4
0
Hunter Hayes Entrepreneur • Advisor
Founder & CEO at Zerocycle
Pretty good article.

http://techcrunch.com/2011/09/22/free-startup-docs-how-much-equity-should-advisors-get/
Michael Weickert
1
0
♦ Strategic & Entrepreneurial Executive ♦ Trail-blazing leadership in biotech, medical device & pharmaceutical business
Advisors should be on the low end of that range unless they are going to be relatively active participants in the company and actually performing some small services. It is up to the company and advisor to mutually agree to the roles and expectations, and there are no hard and fast rules. That being said, there are some norms to consider.

Typical advisor expectations are: providing feedback and comments on corporate activities in their areas of competence, answering questions in their field, making introductions in their field, attending occasional meetings including with other advisors to discuss company strategy and plans. These activities should be limited to on average no more than 1-2 requests every couple weeks. There may be periods of significant engagement followed by periods of little or no engagement as long as it averages out. If advisors are performing work such as conducting experiments, creating prototypes, testing product, drafting documents, conducting meetings on the company's behalf, the company should be paying them as a consultant, which it can do in addition to their advisory role.

Good luck.
Michael
Mark Silva
2
0
Mark Silva Entrepreneur
Finance & Operations at KITE
Agree with other responses. You should spell out expectations in an engagement letter, fwiw. I posted a couple of open source samples you can use as a starter.http://www.scribd.com/RealMarkSilva

I have a range of advisors from ones that look like consultants actively delivering services to our business (legal, design, etc) to ones that complement my knowledge and expertise in specific areas. We expect formal monthly checkins by Google Hangout, availability for 24-hour turn on specific questions (which I don't use/abuse but like having the safety valve there) and twice a year in person.

Hope this is helpful. Cheers!
Darrin Parker
3
0
Darrin Parker Entrepreneur
CRM Software Entrepreneur
Here are standard advisor expectations and compensation parameters provided by the Founder Institute:

I haven't used the template myself but I am considering it right now.

Cheers,
Darrin
Jessica Alter
12
0
Jessica Alter Entrepreneur • Advisor
Entrepreneur & Advisor
Fair question. First, we've created both a guide for equity to give and a template agreement (w/orrick and gunderson) that can be found heremembers.founderdating.com/resources/templates.

Second, for any advisor you start working with you should be cognizant of what they are bringing to the table. In my mind their value can come in a couple categories:
1. Industry Knowledge - they are an industry expert. Often times these aren't startup people, but people inside an industry that understand it and can help navigate it.
2. Product Knowledge - they are great at a certain area you need help in - mobile distribution, hardware manufacturing, B2B sales, technology scaling, etc.
3. Relationships - they are a connector and not only can they get you to people (this can include fundraising) that you need to talk to but they are willing to - important distinction.

4. Entrepreneurial Leadership/Coaching - they've been through the entrepreneurial trenches and they can help you with big and small decisions. They've built teams, they've failed, etc. Don't underestimate the importance of this last category.

You should verbally agree to a time commitment with your advisors and how they want to communicate in between e.g. once a week by skype or every 3 weeks in person. You can put it in an agreement but at the end of the day if they don't want to engage an agreement won't force them.

I also wrote a comprehensive list of questions to talk over with advisors before you formalize the relationship >founderdating.com/questions-to-ask-potential-advisors-the-master-list
Arman Gukasyan
0
0
Arman Gukasyan Entrepreneur
CEO at 3DreamTeam Inc. Product Manager of Revizto 3D visual collaboration software
In my experience when I did not clearly stated my expectations from advisors the real input was irrelevant to our team and our product.
I agree with other comments you should really understand what you want to get from an advisor in which exact field of expertise. And that all should be clearly stated in an engagement letter. Also involve advisor to project his own expectations of his input that is going to make in your company that's a good exercise for both parties.
Thomas M. Loarie
0
0
"Bringing Entrepreneurs and Technology to Life" CEO and Chairman, Mentoring and Coaching of C-Level Executives
Templates and guidelines are great but the reality will be "what will it take" to get critical advisors on board. If they are not critical to the mission then they should not be added. Flexibility is the byword.
Max Martinez
1
0
Max Martinez Entrepreneur
Creator
I could spend my time echoing all the great advice given above, but I really think it just depends on how much expertise that person has in the industry and how much time they give your company.

For example, if someone was starting a food service and somehow got a way to get Mark Zuckerberg as an advisor, how much does he know about food and how much time would he give you? Probably not much (although I would never ever doubt him!) and he'd probably command quite a hefty percentage.

But what if you got an advisor who has started a few small restaurants and has been fairly successful? He may not know as many people as Zuck, but he would probably have closer relationships to people in the industry and actually be able to lay out a game plan with you.

Basically, lay out exactly what you want from them and expect them to deliver, that's how you can determine the percentage they get.
Jane He
1
0
Jane He Advisor
CEO at Signority, secure signature workflows
Great discussion. The techcrunch template is an excellent starting point. It's very important to have 3 months cliff period, which means you don't compensate anything within 3 months.

Before you make your decision, be careful if your candidate will spend the time as committed. I have excellent advisors but also had to fire a few in the past. When the business just started, you might have idea. There are lots of, what I called "opportunists": they might have successes in their businesses in the past. They make use of their successful history to sign up many startups, more than 20. Then they don't spend time to understand your business. They might have some "raw" ideas from time to time and then shot you those immatured ideas. This will become very distractions to you. When things go south, they blame you cannot execute, you cannot talk to customers...My experience is: you need to be absolutely believe in yourself. You also have the power to do right things for your company - fire them if you cannot work with them.

Arlen Meyers, MD, MBA
0
1
Co-Founder,President and CEO, Society of Physician Entrepreneurs at ceo@sopenet.net
Some thoughts:
https://www.linkedin.com/pulse/advising-advisors-arlen-meyers-md-mba

Join FounderDating to participate in the discussion
Nothing gets posted to LinkedIn and your information will not be shared.

Just a few more details please.

DO: Start a discussion, share a resource, or ask a question related to entrepreneurship.
DON'T: Post about prohibited topics such as recruiting, cofounder wanted, check out my product
or feedback on the FD site (you can send this to us directly info@founderdating.com).
See the Community Code of Conduct for more details.

Title

Give your question or discussion topic a great title, make it catchy and succinct.

Details

Make sure what you're about to say is specific and relevant - you'll get better responses.

Topics

Tag your discussion so you get more relevant responses.

Question goes here

1,300 Followers

  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
Know someone who should answer this question? Enter their email below
Stay current and follow these discussion topics?