Questions

I got an offer to join advisory board of a great start up where the business idea resonates with my thought process and they already have a great team in the making. What factors to consider and what important and specific questions to ask to take the offer discussions in the right direction?

The point of advising is to have fun but it's also to align with the upside of the business. So the things to consider / ensure are.
- Are they venture backeable ... if they don't plan (or you don't see them being able to) raise venture capital, then being a formal advisor (with equity) won't matter.
- Do you trust them. As an advisor, you're extended your brand and credibility to the team so you need to ensure they'll be good stewards of it.
- Are they coacheable ... when you talk, do they listen and are open to the advice. Do they take action?

As for compensation & commitment, here's what's normal.
- 0.1-1% equity in the early stages .. usually over 2 years vesting monthly.
- You make yourself available for 1-2 hour per month, and help throughout making introductions, reviewing documents,etc

Personally, I think it's super important to ensure you tell what you won't be doing. Ex: I won't be accountable for a work product, as in - I'm not going to run your marketing / development team :)

You never know what people expect, so it's best to discuss it upfront.

Also, if you plan on doing formal advisory (for compensation) - it's ideal to get atleast 10+ companies to help out in that format to ever see a financial return ... your essentially acting much like a VC.

So just understand, there's a very high likely hood that it won't go anywhere financially .. but it can be super rewarding.

The key is that you enjoy spending time with the team and learning about their journey.


Answered 5 years ago

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