Advisors · Fundraising

How much extra compensation should I offer an advisor if he does something big, like attracting an investment?

Anonymous

June 5th, 2017

I'm working out an equity agreement for an advisor. One of his responsibilities is to introduce my team to potential investors. The advisor wants additional compensation if he successfully raises funds. How much should I offer? A percentage of what's raised?

Ifeoma Okeke Founder Swave Energy Solutions Co.

June 10th, 2017

I happen to be in your same shoes with my business.

I'd say you've started well with the base equity. I'm also doing that along with a percentage (say 10% of any funds attracted) shared among all advisors.

More like an equity pool and additional pool from investment money.

Keeps everyone committed in the business.

Afolabi Abiodun Cofounder

Last updated on June 6th, 2017

Good one.

First, estimate your total expenses

Secondly, calculate the capital for the investing and the profit.

Above all, read across your company policy and find out how much you can give to advisor and if you dont have one, establish a valuation for your company and build an investor pipeline for your next round.

Hope this helps.


Best Regards

Marcus

Emmanuel Mosoti Lead, Paraclete Consult. Consummate financial consultant, PPP practitoner, ex Banker.

June 11th, 2017

5% - 15% depending on his/her/their value contribution. Higher if the client had no ties to you and is brought on board solely for the advisor's efforts. Also, depending on existing remuneration structures, higher if advisor is on a success fee model with only costs and a small retainer - lower if on a reasonable monthly fee.