How much equity for advisor/mentor?

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How much equity for advisor/mentor?

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abc1111

posts: 88

Feb 06, 2008 12:33 AM ET Quote Report Abuse

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I am trying to get new advisors/mentors on my start-up (early stages!). I guess no one would really want to work as an advisor/mentor for free.....What percentage is common practice to give for an advisor (1h/week of their time)?

EngineersCanSell

posts: 163

Feb 06, 2008 10:41 AM ET Quote Report Abuse

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I would disagree with your basic premise. Most of the time I bring an advisory board in, they are not paid (at least initially). Under the assumption that you want successful, knowledgeable people as advisors they don`t need money that bad. What they do thrive on is being able to say that they helped a struggling company rise to the top of their field. Note that I`m assuming you are talking about an advisory board and not an official board of directors.

That being said, if you are luring people in that don`t really believe in your mission - but you want to use them for their contacts and reputation, that`s something totally different. Try 0.5% and don`t allow a non-dilution clause to be put on it.

Each situation is different, but I`d be extremely hesitant to go over 2%. If they can bring you a boatload of business, set up a commission structure instead. It will be better for both parties.

Ripose

posts: 51

Feb 07, 2008 1:57 AM ET Quote Report Abuse

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Would this percentage be forever, or for a set period of time?

E.G. Design my site, receive 1.5% for 1 year.
This of course would not be until the website generates an income.

RicWillmot

posts: 154

Feb 08, 2008 9:01 AM ET Quote Report Abuse

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I would discourage you from offering equity to a mentor.

(Please note: I could be construed as having a bias because I have a Mentor Program myself.)

Remember what Groucho Marx said: "Any club that would have me for a member, is a club I do not wish to join."

Rgds,

Ric

-------------------------

Ric Willmot
Executive Wisdom Consulting Group
www.ExecutiveWisdom.com
info@executivewisdom.com
Blog: www.ricwillmot.com

Founder of the Society for Executive Wisdom
www.ExecutiveWisdomSociety.com

Strategy for Professionals: www.strategyforprofessionals.com

MichelleAC

posts: 10

Feb 08, 2008 1:06 PM ET Quote Report Abuse

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I agree with Ric. I would advise against offering equity to a mentor.

There are many mentors and coaches (like myself) that will work with small startup companies for not initial compensation. We might do it for various reasons.

Try reaching out to a few mentors and coaches and see what you get. You might be surprised.

-------------------------

Michelle
President, Arrington Management Services
www.arringtonmanagementservices.com

RicWillmot

posts: 154

Feb 08, 2008 5:24 PM ET Quote Report Abuse

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My grandfather was a Rat of Tobruk, and for a brief time was a prisoner of war. He had a phrase, "When you know you are going to be shot in the morning, it marvelously focuses your attention."

Join a mentor program, pay the money and then you will have significant motivation to do what is necessary to become successful. If you have no buy-in, you have no real commitment. Investing in your business will focus your attention.

Rgds,

Ric

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