I hear of a lot of startups building their advisory board with industry experts and I'm just curious what this arrangement would look like?

Compensating an advisor can take a variety of directions. It is always best to have an agreement with an advisory board member...even if it a one-pager outlining the roles & responsibilities of the Advisor and the firm. Popular compensation models:
1. Equity - in the form of warrants that vest over time...allows time to show that the Advisor can add value. Generally 1% or less.
2. Compensation - A fee that is based on per meeting or other event...again based on some value-add activity.
3. Mentorship - Some individuals do just want to provide advice...would still be clear about the role they play as free advice may or may not be helpful.
4. Angel Investor - A number of angels making an investment in your firm will be interested in being an advisory board member.
5. Regardless, you should compensate the individual for reasonable travel expenses for meetings and business development .

Selecting and compensating an Advisory Board member is the same process as selecting and any one on your team - handle it with care and respect!

Answered 6 years ago

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