Forums: Discussions for entrepreneurs and small business.

I am in the early stages of a start-up, going through the FFF round to raise $30k.     I have a friend that has started his own company ($14M+ - Tier 1 VC funded).   He is very interested in my business concept and has mentioned that

1.  he is interested in investing, and

2.  he would like to be an advisor.

I can really use his assistance on both; he would definitely add value. 

I'm willing to offer him the standard .25% to act as an advisory, but I'm concerned that if I do this, he won't be interested in investing.    Am I wrong with thinking this?

I just don't know how I should best move forward -

- get his investment first, then ask him to be an advisor

versus

- combine the investment and acting as an advisor into the same conversation

versus

- ask him to be an advisor, then see if he will invest

Obviously I can use his money, so (without sounding greedy) I don't want to lose that piece of this.

Any thoughts/advice is appreciated!!! Thanks in advance for the help!

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Considered forming an advisory board?  I was part of one advisory board for a friend that had started a business.  The board members weren't paid and provided objective advice from their various fields of expertise.  (Board members represented human resources, financial, management/leadership and marketing fields of expertise.)  We knew it was a volunteer position and the window was open to the firm of forming a board of directors later in their growth/success path.  We met quarterly.

All went well until one of the members became an investor in the business.  From my perspective, his advice immediately became less objective, more guarded, didn't agree with the rest of the board, etc.  Within 6 months, I made the call that I should part company with the board and the firm.  Soon after that, the two principle partners parted ways.

My advice would be to make a call.  Do you want the person to be a major investor or an objective advisor?  The major investment might require partnership and a significant ownership position in the firm.  You'll certainly get the advantage of his expertise then, but from a joint ownership perspective.

Good luck!

Paul