Thu, 6 May 2021
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
Once you’ve found an advisor you want to bring on board, consider the compensation.
It’s important to pay the advisor something for their time and experience.
Real work requires real pay.
Not all advisors bring the same level of support to the startup.
Also consider that equity increases in value as the company grows.
Later-stage company equity is worth a great deal more than an early-stage company.
With this in mind, consider the following:
There are standard advisors who share their experience.
For early-stage companies consider 0.25% of equity vested over one year.
For growth-stage companies consider 0.15% of equity vested over a year.
Then there are premium advisors who not only share their experience but also make introductions to investors, customers, and partners.
For early-stage companies, consider 1% of equity vested over one year.
For growth-stage companies consider 0.5% of equity vested over a year.
Set the compensation based on the stage of the company and the contribution of the advisor.
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