4 ms·

Ask HN: How much equity to give to a mentor?

• pushtheenvelope 8y ago
  Good job on getting a product going! Having a solid advisory team that inspires you and motivates you through the ups and downs of a startup is very important. This individual will hopefully help you stay focused along the way. A common custom would be to treat her as a strategic advisor, offering 0.1-1% equity, with vesting. Try to have some understanding of how much time they can commit to and on what frequency. An example doc is https://fi.co/fast https://fi.co/fast, but if you google for “startup advisor agreements” you’ll find a few similar standard docs.
  • ecesena 8y ago
    I support the fi.co/fast, but I personally think it's a bit too in favor of the startup, and real world advisory agreements may require much less effort from the advisor. For example the 1% is at idea stage and requires 20h/mo = avg 1h/day, which is an insane amount. It's more realistic to have a consistent 30min call/mo, and maybe a few extra hours when the advisor is really needed, for example if you're brainstorming an idea, or executing on a launch. And maybe it's worth giving them a 0.5% even for this apparently small amount of time. That's also more realistic for you, because you want to be prepared to talk to your advisors, and having too many interactions is just too distracting. Vesting, I've seen it many time as 2y no cliff vs the classical 4y + 1y cliff for employees/founders. If you know the advisor already and she already provided value, you have no reason to require a cliff. Again, I support the fi.co/fast, and I'm not saying to not go with that as a start, mine are just negotiation points to close a good advisor. Finding good advisors is hard, they might have little time, and they may refuse the engagement if it seems too heavy from the get go.
    • pushtheenvelope 8y ago
      I mentioned fi.co/fast as an example of an advisor agreement, rather than endorsing its exact recommendations. I should've been more clear on that. Many of the points you raise sound very reasonable. Thanks for sharing them!
• gogopuppygogo 8y ago
  The more you offer the more you need to tie it to deliverables. There are limitations on what a person can do without a license to raise money on contingency but you can set goals of X number of introductions to venture capitalists as a criteria for earning equity. I tend to like offering 1-3% to a really accomplished person if it's very early and they can commit time to the company. If it's later stage 0.25 - 1% is more common. You can also pay an Advisor with cash and lower the amount of equity. What do you need this person for?
  • yazr 8y ago
    If you need to set your mentor performance-metrics, u should probably find yourself someone else (I am not the down-voter). Also, 1% for later-stage? post-VC? sounds very high. I like this article, which describes 3 different scenarios https://www.inc.com/john-rampton/how-much-equity-should-you-give-to-a-mentor.html https://www.inc.com/john-rampton/how-much-equity-should-you-...
• muzani 8y ago
  You might just consider asking them directly, see how much they want. My mentors refused to take equity; that might be the case with yours as well. But once they give you a number, the formula is 1/(1 - n) Meaning if they take 0.5%, they should increase the value of the company by 0.503% If just the motivational value of talking to them can increase the value of the company by that much, then it's a good deal. Also from personal experience, someone who has a little financial incentive will go out of their way to help you. Often they do anyway, but they do it for multiple people. If they have a little ownership, they'll prioritize it more.