Advisors · Equity

How much equity would you give an advisor?

Monica Zent Founder, CEO, Investor; Board Member, Advisor

July 17th, 2013


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.

Brian McConnell

July 17th, 2013

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.

Mohamed Alborno Director / Producer @ The New Country Film Project

July 17th, 2013

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

Joe Hurd Husband. Father. Operator. Advisor. Investor.

July 17th, 2013

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

Anonymous

July 17th, 2013

Usually somewhere between 0.25 and 0.75. Sent from my iPhone

Duane Nickull Chief Marketing Officer, Co-Founder at Cheddar Labs

July 17th, 2013

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 Co-founder at Rentini

July 17th, 2013

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 Dreams Maker through Innovation

July 17th, 2013

Between half percent to one percent, fully diluted. Sent from my  iPhone.

Mohamed Alborno Director / Producer @ The New Country Film Project

July 17th, 2013

Hi Monica,

Mitchell Portnoy Healthcare Information Executive

July 17th, 2013

Based on your stated facts and depending on how badly you need/want this advisor I would say a vanishingly small amount.

Monica Zent Founder, CEO, Investor; Board Member, Advisor

July 17th, 2013

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.