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How much equity would you give an advisor?


For a key advisor who is bringing value- how much are you (as a founder) willing to give in terms of equity?

In sharing your thoughts, please assume these facts:

-you are the founder

-the company is beyond seed stage

- you have not givenequity to any other advisors to date, and

-the advisor is bringing value (but not personally funding),available to meet once p/mo., believes in the company,etc.

Based on that, curious what the consensus is on what theequity and vesting for the advisor should be.

Thx for your input.

21 Replies

Brian McConnell
1
0
Brian McConnell Entrepreneur
Head of Localization at Medium.com
If the advisor is not putting money in and is not working full time then as little equity as possible. You need to conserve it for employees and investors. If the advisor is helping with introductions or biz Dev then tie equity to results.
Joe Hurd
0
0
Joe Hurd Entrepreneur • Advisor
Husband. Father. Operator. Advisor. Investor.
0.1 to 0.5 pct (10-50 bp) vested monthly over a 2-3 year term. Sent via smartphone - Pleez excuz mistaks. Blame Siri. +1 650 215 3115 Hurd3rd@gmail.com
Davide Di Cillo
0
0
Davide Di Cillo Entrepreneur
Designer and entrepreneur, I apply my creativity to my business and projects.
Usually somewhere between 0.25 and 0.75. Sent from my iPhone
Duane Nickull
0
0
Duane Nickull Entrepreneur • Advisor
Chief Marketing Officer, Co-Founder at Cheddar Labs
It depends on experience, fit and reach. I sit on several advisory boards. If the company is working on technology i helped pioneer or co-invent, then 1.5-2% is perhaps warranted if the person has the ability to provide a 10X ROI. On the other hand, as low as 0.5 can be quantified. Here are some examples:

One company I sit on the AB of was working with SOA and Web Services. Since I was a contributor to the W3C Web Services Architecture Working Group, Chaired the OASIS SOA reference Model technical committee and also contributed to many WS specifications, my presence was deemed instrumental to a company wishing to make it's name in that space.

Another company was all about Web 2.0. I was a co-author of "Web 2.0 Architectures" (O'Reilly) so again my endorsement of one company in a crowded space was worth 1.5%.

It also depends on the deliverables and timing too. An exclusive endorsement from a technologist who has co-invented the area the company is working in is worth a lot.

Duane
Vadim Oss
0
0
Vadim Oss Entrepreneur • Advisor
Co-founder at Rentini
Depending on the results that you expect to accomplish by having this advisor it could be anywhere between 0.1% - 2% post-money Round A.

The key is to make sure they are vested on monthly basis without a cliff over 1-2 years. He/she should regularly provide you their advice. As soon as they stop bringing you value you can stop their vesting schedule and hire someone else for that equity. Monthly meetings are the must. Read more here:

http://venturehacks.com/articles/advisors-part-2

Perhaps part 1 would be an interesting read for you too:
http://venturehacks.com/articles/advisors

Cheers!


Jacob Dvir
0
0
Jacob Dvir Entrepreneur • Advisor
Dreams Maker through Innovation
Between half percent to one percent, fully diluted. Sent from my ? iPhone.
Mohamed Alborno
0
0
Mohamed Alborno Entrepreneur
Director / Producer @ The New Country Film Project
Hi Monica,
Mitchell Portnoy
0
0
Mitchell Portnoy Entrepreneur
Healthcare Information Executive
Based on your stated facts and depending on how badly you need/want this advisor I would say a vanishingly small amount.
Mohamed Alborno
1
0
Mohamed Alborno Entrepreneur
Director / Producer @ The New Country Film Project
One of the ways is to calculate how much time is s/he putting in multiplied by their hourly rate (or the rate that you think they are worth). Then see how much is this based on your valuation.
Based on what you say, I would give 0.5% - 2%, the cliff and vesting would be negotiated.
Regards from Montreal.
Mohamed
Inspiring explainer videos by aspiring filmmakers
Monica Zent
0
0
Monica Zent Entrepreneur • Advisor
Founder, CEO, Investor; Board Member, Advisor
thanks guys- all great inputs. I was thinking far less- a fraction of a point - and requiring an investment as well as hitting a key milestone.
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