@hangnon2jesus I would stay away, but one thing I learned is ask for references and call those references.
Advisor asking for 7%, is it normal?
- Thread starter hangnon2jesus
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@hangnon2jesus I have been advisor to companies and did legal work pro-bono , and non of the advisors stock exceed more than 0.1-0.5% combined…
Stay the hell away!!
If the advisor is in sales, and you need a hand in sales then consider giving him a % cut of the business he brings.
Or if he is claiming to help you get Investment, you may consider giving him the industry standard finder’s fee of 0.5-1 %
Stay the hell away!!
If the advisor is in sales, and you need a hand in sales then consider giving him a % cut of the business he brings.
Or if he is claiming to help you get Investment, you may consider giving him the industry standard finder’s fee of 0.5-1 %
@ecowolf If you are just expecting support for B2B sales- you are better off with an incubator which specialise in B2B saas … giving a reputed incubator 7% is better.
I am myself struggling for B2B enterprise sales in AI . If you want we connect and share our experiences and learning?? Share leads …??
And definitely I don’t need equity lol
I am myself struggling for B2B enterprise sales in AI . If you want we connect and share our experiences and learning?? Share leads …??
And definitely I don’t need equity lol
@hangnon2jesus If he strongly likes your vision, tell him to invest so incentives are aligned.
@hangnon2jesus What a scam! I know someone who runs his own VC and offers his services as an advisor. He lies about his experience claiming he was an engineering manager running 100-person teams at a large company. In reality he was just a junior software engineer. He used the lies to get director level roles at various startups which he was fired from (but only after his 1-year cliff). He gets away with it because people often don't check references and when they do, he directs them to what I could only describe as accomplices. The "advice" he gives to companies consists of him introducing them to people in his LinkedIn network which is comprised of random people he met at parties, and giving them simple advice you can get from any startup book or marketing article like "look at your funnel and improve conversion rates".
People like that do immense damage to the entire community. I don't understand why anyone would give them even 0.7% when they contribute much less value than probably any of the first 100 employees. You don't need them. Run.
Instead, find the best engineers you possibly can and split the 7% between them. Worth every percent.
People like that do immense damage to the entire community. I don't understand why anyone would give them even 0.7% when they contribute much less value than probably any of the first 100 employees. You don't need them. Run.
Instead, find the best engineers you possibly can and split the 7% between them. Worth every percent.
@hangnon2jesus Many great business advisors whom I've met won't hesitate to downplay their cut to see the business take off, quicker to commit time /effort with no or low bargaining, look for the collective win more than self-enrichment, self-interest is still there of course but way behind the scene instead of in your face, and because of these qualities they get pulled more into successful projects and ventures.
Their high qualities act as a gravitational force that propels them more into sucess.
Their high qualities act as a gravitational force that propels them more into sucess.
@hangnon2jesus Run away.
As a rule: equity for advisors is given retroactively, after they demonstrate value. Talk is cheap.
As a rule: equity for advisors is given retroactively, after they demonstrate value. Talk is cheap.
kelvinsayhi
New member
@hangnon2jesus Just use and stick to what founder institute has - https://fi.co/fast
hasta_lavista
New member
@hangnon2jesus Just ask him to put you in contact with that "having an exit soon" founder.
boxofficerevolutionary
New member
@hangnon2jesus I’m an active advisor, so I’ll add to what others have said.
Don’t do it.
7% is insane unless they are bringing something to the table that substantially reduces your risk: Capital, customers, product, team (at highly reduced or no cost), overwhelming industry expertise that can drive demand, etc.
I usually get 0.25-2%, but I bring a lot more than just advice to the table.
What you’ll find is that every successful founder will overly promote themselves, and many have their own “fund”, VC firm, etc. It’s just the thing you do once you’ve had a liquidity event, the entrepreneurial equivalent of buying a sports car to prove you made it.
I did all those things too, to be honest. It’s bullshit though. Vanity projects.
Don’t do it.
7% is insane unless they are bringing something to the table that substantially reduces your risk: Capital, customers, product, team (at highly reduced or no cost), overwhelming industry expertise that can drive demand, etc.
I usually get 0.25-2%, but I bring a lot more than just advice to the table.
What you’ll find is that every successful founder will overly promote themselves, and many have their own “fund”, VC firm, etc. It’s just the thing you do once you’ve had a liquidity event, the entrepreneurial equivalent of buying a sports car to prove you made it.
I did all those things too, to be honest. It’s bullshit though. Vanity projects.
@boxofficerevolutionary Love your honesty. 
davidnuady
New member
@hangnon2jesus Hey, Just urself and ur team. Do u need him? if yes. do u reallly need need him to a point that u cant start ur company. and even if u start he may not deliver ( basically ask ur self ). if no simple decision.
stagnate77
New member
@hangnon2jesus I think you know the answer already. Unless that "advisor" is guaranteeing me a funding round from Sequoia, I'd run.
If he has his own VC and believes in your company, why isn't he personally investing?
The only advisor I've ever paid was a L7 at google and he wanted 3% and basically worked harder than all the other engineers at my company. He did system design, introduced me to all his google cloud friends, and always picked up within 2 rings when our team ran into a technical problem. I tired to hire him but he loves his job and he doesn't want to leave $700k annual TC to join a startup that can't pay him as much.
If he has his own VC and believes in your company, why isn't he personally investing?
The only advisor I've ever paid was a L7 at google and he wanted 3% and basically worked harder than all the other engineers at my company. He did system design, introduced me to all his google cloud friends, and always picked up within 2 rings when our team ran into a technical problem. I tired to hire him but he loves his job and he doesn't want to leave $700k annual TC to join a startup that can't pay him as much.
@hangnon2jesus If his LinkedIn profile is not matching to what he claims, it’s a huge red flag. Ignore him. I also started talking to few folks for a cofounder, what they claim startup and exits, most of those are shutdowns no where to find.
@hangnon2jesus You have all the answers you need, if your heart doesn't say - Fuck YES. It's a NO.
The startup world has enough of "Self proclaimed" experts who claim to know a lot, but are hollow from the insides.
A true entrepreneur knows - Value first, and this one doesn't seem like one. Entrepreneurs go out of their way to help people in their network, and this fella doesn't give me those vibes.
The startup world has enough of "Self proclaimed" experts who claim to know a lot, but are hollow from the insides.
A true entrepreneur knows - Value first, and this one doesn't seem like one. Entrepreneurs go out of their way to help people in their network, and this fella doesn't give me those vibes.
someorder2
New member
@hangnon2jesus If something made you think between yes/no, it’s always no.
someorder2
New member
@hangnon2jesus Jason Lemkin of SaaStr had an excellent framework to onboard advisors.
- Fix a hourly rate for the advisor if he/she was a consultant (say $300/hour)
- Now calculate how many hours will they spend with you in an year (say 50 hours)
- Calculate the fee that you may have paid ($300 x 50 = $15,000)
- Now allocate stock based on your current valuation (if you don’t have one, always start at $3M range)
@someorder2 Thank you for sharing, super interesting
mercychild
New member
@hangnon2jesus You seem to already know it's a bad idea. I've seen companies raise 30m like it's nothing that are significantly behind where we are.
We won't give up ANY equity to anyone without a serious buy in and value shown first. If this person is so interesting and they can back it up. Have them sign a contingent deal on equity after you secure funding. Should be a no brainer for them.
Valuation is the money that goes back into a company. It is no key indicator for success, I've seen companies go bankrupt after raising well over 10 million with the wrong team. The people that can raise that amount are normally the ones that don't have the first clue on product from my experience. Raising won't pay you anything, it's not an acquisition, it's maybe a way for you to get a salary as a founder but even then, you'll have to pay yourself less for being a founder.
Find people to make your company make profit and keep building. You'll have no problem raising and you'll be able to justify paying yourself fairly as well.
Now here's the kicker, this would be my advice if he PROVED to be successful and had all this backing and news coverage of selling companies. The fact he's a wannabe says it all, he 10x'd what he probably got and if he was a successful VC he'd give you some cash for that equity to scale you guys properly.
We have tons of these guys try this crap with us. Telling them no wasn't hard and we were better for it. I don't understand founders that give equity to advisors. I literally get offered equity to "advise" and I turn it down unless I can provide real value.
I could be wrong, but from my experience with VC's and securing our first VC round. I can't think that a single VC I've talked to would take you seriously if you brought someone like this on.
We won't give up ANY equity to anyone without a serious buy in and value shown first. If this person is so interesting and they can back it up. Have them sign a contingent deal on equity after you secure funding. Should be a no brainer for them.
Valuation is the money that goes back into a company. It is no key indicator for success, I've seen companies go bankrupt after raising well over 10 million with the wrong team. The people that can raise that amount are normally the ones that don't have the first clue on product from my experience. Raising won't pay you anything, it's not an acquisition, it's maybe a way for you to get a salary as a founder but even then, you'll have to pay yourself less for being a founder.
Find people to make your company make profit and keep building. You'll have no problem raising and you'll be able to justify paying yourself fairly as well.
Now here's the kicker, this would be my advice if he PROVED to be successful and had all this backing and news coverage of selling companies. The fact he's a wannabe says it all, he 10x'd what he probably got and if he was a successful VC he'd give you some cash for that equity to scale you guys properly.
We have tons of these guys try this crap with us. Telling them no wasn't hard and we were better for it. I don't understand founders that give equity to advisors. I literally get offered equity to "advise" and I turn it down unless I can provide real value.
I could be wrong, but from my experience with VC's and securing our first VC round. I can't think that a single VC I've talked to would take you seriously if you brought someone like this on.