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Advisors

A broad network of advisors can help early stage companies go to the distance.
 
Key considerations in forming formal advisor relationships:
  • Domain expertise - does the advisor operate in a similar space? Ideally 2-3 years ahead of your current stage so their experience and network is still fresh.
  • Complementary experience - are you looking for advice in specific functional areas that complements the current management team composition?
  • Name recognition - would the advisor’s reputation provide additional credibility to the business?
  • Availability - does the advisor have the time for regular check-ins and Q&A sessions?

Advisor Compensation

Formal advisors typically receive equity in the company to compensate for their time and effort. Depending on the advisor’s level of active contribution (i.e. introductions to talent pool, target customers, etc.), time commitment, and stage of the business, equity allocation can range from 0.15% to 1.00%. An example based on time commitment: between 0.1% (quarterly) and 0.25% (monthly), and up to 0.5% if weekly meetings.
Other potential structures:
Standard Performance
Time Commitment: 5 hours/mo Meetings: Quarterly strategy meetings, scheduled Advisory Board meetings Responsiveness: Reasonable to email
*Actively introduce to general contacts in network *Forward materials at company request
0.25% for Idea stage 0.20% for Startup stage 0.15% for Growth stage
Strategic Performance
Time Commitment: 10 hours/mo Meetings: Monthly strategy meetings, scheduled Advisory Board meetings, at least one meeting with partners, customers, vendors, or employees Responsiveness: Quick to email for those in or associated with company
*Actively introduce to general contacts in network *Forward materials at company request *Assist in finding team members and employees
0.50% for Idea stage 0.40% for Startup stage 0.30% for Growth stage
Expert Performance
Time Commitment: 20 hours/mo Meetings: Bi-monthly strategy meetings, scheduled Advisory Board meetings, internal project related meetings, meetings with partners, customers, vendors, and employees Responsiveness: Quick to email or phone for those in or associated with company
*Actively introduce to general contacts in network *Forward materials at company request *Make key introductions to partners, customers, vendors, and employees and join meetings *Assist on at least one strategic project
1.00% for Idea stage 0.80% for Startup stage 0.60% for Growth stage
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Team
Customers
Revenue
Investors
Product
Idea
Only part-time founders
In discussion with potential customers to determine market, pricing/revenue developed but needs validation
None
At least one, usually the founder or their friends or family
Minimum viable product specifications - wireframes, system designs
Startup
Full time, hiring initial employees
Letters of intent or customer commitments, validated market
Might be collecting revenue
Might have friends and family or professional investors
Launch of minimum viable product imminent
Growth
Full time, hiring initial employees
Significant traction and user based growth
Is collecting revenue
Prior investment may have been raised or prepared to raise
Product launched and periodically refined with customer feedback
Typical vesting period for advisor shares is 2 years (monthly).
 
Advisor compensation and scope of services should be outlined clearly in the Advisor Agreement. Each OCV company will receive its own Advisor Agreement templates from legal counsel.

Additional Reference