Advisor asking for 7%, is it normal?

[agentsmith]

@hangnon2jesus Correct me if I’m wrong but I’ve usually seen advisors get around 2% of a business in exchange for their time.
Secondly, his professional experience isn’t verifiable. Call the whole thing off!

 

[hangnon2jesus]

@agentsmith Honestly this part worries me too. I am not able to verify any success whatsoever.

But we tell ourselves let’s not judge by what’s public, maybe he didn’t do well in the past but now he is successful and then we protect ourselves with a cliff. What do you think?

 

[agentsmith]

@hangnon2jesus Looks like you’re negotiating with yourself with “maybe he didn’t do well in the past”….
That’s not a question you want to answer yourself rather this person should communicate his experience well and not leave a shadow of doubt. That’s what feels off to me.
Aye man, what does your gut feeling say?
To me it sounds like this guy served you a word salad in an eloquent manner.

 

[hangnon2jesus]

@agentsmith Honestly, I strongly don't want to proceed with him because I can't verify any of what he claims. And on the same time, I don't want to give more than 1% for an advisor.

Also, two of the founders don't want to proceed, and the third wants to go for it with less equity but protect ourselves with a cliff of 3 to 6 months to test the water.

 

[agentsmith]

@hangnon2jesus Firstly the third founder is technically out voted but it’s important to ask them what’s their reason behind wanting to opt for bringing this advisor guy on board despite the lack of evidence which can verify their professional experience. This conversation is important.

Bad hires are extreme costly, financially and emotionally. To boil it all down, I wouldn’t hire this advisor, equity is out of the question (and he asked for 7 fuckin percent? The audacity?).

 

[hangnon2jesus]

@agentsmith Awesome. Thank you very much. Highly appreciate it!!

 

[agentsmith]

@hangnon2jesus You’re most welcome Best of luck sir!

 

[nineteenkilo]

@hangnon2jesus Good advisors are everywhere. You don’t need one who you already feel like this about.

In my experience, good advisors take very little equity (fractions of percentages) unless they are taking on an active role and filling a critical function where you are struggling. In that case, the equity is largely tied to the employment agreement, and vests over 3-4 years of service.

As an advisor I expect .25-.5% equity with some small monthly stipend if the company has raised. If they haven’t raised, I expect .5-1% and no stipend.

Owners need to retain their equity. You’ll raise and get diluted. Then you’ll raise again and get diluted again. If you’re going to $100mm in MRR you may raise a third or fourth time and end up owning less of your company than the sheister who is asking for 7%.

Founder Equity is nearly impossible to get back. It is literally the thing that will change your life. Don’t give 7% to anyone just for advising.

DM me if you want to hear about the advisory board we are building at my current startup, and how we expect to retain most of our equity in the process.

 

[ccn]

@hangnon2jesus Run.

 

[webofiron]

@hangnon2jesus You already know the answer. This “advisor” is pretending to be much more than they are. You wish it was true so you are trying to bs yourself into believing in it. Just don’t, move on. It is a scammer.

 

[ecowolf]

@webofiron I guess rather than wishing it was true. We are just curious to see and prove our intution is right or wrong. Right now all 3 founders have that gut feeling that he is not legit, however, we dont want this to be influenced by our emotions and maybe do the wrong decision. The first 2 meetings were pretty exciting, but after the research of him and finding/ or not finding the things he claimed. Changed our whole perspective of him, which dramatically influenced the way we entered into the call today.

Ps: I am one of the founder

 

[webofiron]

@ecowolf Con artists always have their way of creating FOMO. They excel at making it look like they are the big deal and getting you excited, hoping that you will skip due diligence.

 

[macb]

@hangnon2jesus Get the hell out of the deal.

 

[cityofdavid]

@hangnon2jesus Run away

 

[eileenwithfaith]

@hangnon2jesus Huge red flags. Run.