"I had a startup advisor ask for 1%-1.5% in return for monthly calls and introduction to potential new hires" - no thank you!
Advisors, I'm sorry. Some of you really are worth 1% or more to these early founders. But you gotta make the case as to why you're better than 9 out of 10 of your peers.
Republishing this data after a great session with accelerator founders just this morning, many of whom were not from the Bay Area and were candidly getting sticker shock at the advisor requests from locals who "know this market".
Data in the graphic reflects the full option grant % given to advisors by stage. Split into low (25th pct), medium (50th pct), high (75th pct) and super high (90th pct).
And please ensure these advisors have a vesting schedule. Typically 2-years with a short cliff or you can set specific performance milestones (eg Advisor A gets 0.1% equity after they complete the following tasks for the business).
There are two great reasons to add an advisor to your company:
1) They are bringing technical expertise you desperately need. 2) They are introducing you to customers that sign up.
𝗢𝘁𝗵𝗲𝗿 𝗔𝗱𝘃𝗶𝘀𝗼𝗿 𝗗𝗮𝘁𝗮
The median pre-priced round startup on Carta has between 1-2 advisors.
There is a small but growing cohort of startups that have many more advisors (in the 10-15 range). Those folks are getting much smaller slices of equity - not sure if this is a new strategy or just a quirk of the moment.
We see many people start out as advisors and then become strategic investors (typically with a smaller check) into the same company. That's a great strategy to bolster the value of said advisors as a signal to potential VCs.
The most common template for advisor equity docs and agreements is the FAST (Founder/Advisor Standard Template). I think it's a great and highly recommend it to early founders.
The data below covers startups of all kinds. Those building in life sciences and technical hardware do tend to see larger advisor equity grants at the early stages.
#startups #preseed #advisors #advisorequity
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