What Are the Main Reasons Wealthy Advisors Are Interested in Advising?

[puritanage]

Hi there,

I'm looking to bring on an advisor at my new company. The purpose? To help us refine our product (media) in accordance with a certain market that his business, also media, has succeeded in.

However, when approaching this advisor (founder of a company), I want to talk in his interests and therefore need to understand better the range of benefits for advisors.

For an advisor who already has their own successful company, while a percentage of ownership might be nice - capital isn't something they need. And therefore, locking in their time (e.g. a call once per month), for capital, doesn't seem something they would take (I know I wouldn't). I am aware there are other benefits and incentives for being an advisor, but it would be good to have a clear understanding of those.

Can anyone provide some further benefit examples to advisors who already have enough capital to not sell their time?

Thanks!

 

[kberrios]

@puritanage Here are some reasons (not all, or even any, of these will apply to every person in this role):

• Paying it forward. Somebody helped them, they're returning the favor to the universe.
• They like to stay on top of the market, so that when opportunities arise, they'll know what a good investment looks like. Advising people gives them insight from the earliest stage (and thus most innovative and risk-taking) ventures. In tech, this is priceless.
• It gives them an advantage if the company raises money and they want to invest. They're in on the ground floor, even if they don't get more favorable terms, they have more information earlier than investors just hearing about the company when the funding round starts. Being in the angel round is potentially a far bigger return on investment than a series A.
• They're more likely to be invited to be on the board. Not every advisor wants that or would accept that responsibility, but some do.
• They're scouting for acquisitions.
• They're looking to take advantage and take over your company (very rare, at least among reputable folks in the US and Silicon Valley in particular...almost nobody who's been in the industry long would do this, as it'd ruin their rep for other deals, unless they're Elon Musk).
• They're looking for their next venture and may want to join your team when it's time to hire C-levels.

It's best if you approach folks who already have shown interest in what you're doing, but that's not always plausible at early stages.

 

[puritanage]

@kberrios Great ideas, thanks for sharing.

 

[bigoink]

@puritanage Ego

To clarify: I don’t mean that these advisors are egomaniacs. But that it fulfills part of their beliefs about themselves. It can also be fun to apply what you’ve learned, your struggles, to a new idea.

 

[613jono]

@bigoink Yep. It's a way of placing yourself above someone else who is ambitious + smart which feels good. This is why most people give advice.

 

[puritanage]

@613jono Good point, that is likely an important driver, and one that can be healthily tapped into - purely from an impact on the world perspective.