Ask HN: How much equity is a good advisor worth?
Hi Guys,
Long time HN'er here. I'm using a throwaway for this post.
Here's the deal: We have a solid advisor looking to join our startup. His connections and involvement will have a strong positive impact on our company and it's a legitimate possibility that he might invest later in the game.
He's offering 3-4 hours a week of his time and to help us build an advisory board.
How much equity is that worth?
In advance, thanks for your time!
(I know it's a bit of a broad question, but any help the HN community would be highly appreciated)
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9 comments
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Are you planning to draft a legal agreement of sorts with this person? If yes, it may be helpful to tie in dollar amounts with milestones to determine equity percentages, I think. Personally I find it hard to quantify how much connections and a couple of hours a week are worth in terms of dollars. If it's possible to put a revenue amount to what s/he is bringing to the table, either in a strategic "$X in the first N years" or "$X from this release within N years" kind of way, that may help to crystallize the equity percentage somewhat.
<pg> You should give up n% of your company if what you trade it for improves your average outcome enough that the (100 - n)% you have left is worth more than the whole company was before. </pg>
http://www.paulgraham.com/equity.html
http://techcocktail.com/hustle-is-the-antidote-startup-busin...
Ask him to invest now. Even $10. And to help you raise capital (telling other people "yes, I put money into them" lends credibility if the guy does in fact have credibility to lend).
If your advisor has some serious silicon valley connections that he can get on the phone whenever he wants, then he's worth a good percent of equity.