
Ask HN: How much equity to give to a mentor? - algo_trader
I am boot-strapping a B2C company. This started as a pet project, but the prospects are very good. I can probably get a seed $100K-200K on my own.<p>I a senior developer, not a good net-worker, so basically a no-body.<p>I have connected with a very accomplished and friendly potential mentor,  post-CEO, post-acquisition, connected with VCs, similar sector.<p>We haven&#x27;t really discussed anything, but i am wondering how much is a decent equity offer for his time.<p>It would be great for him to evangelize the company and connect me to VCs. He is not interested in any operational role. I also get a good mental boost every time I talk to him.<p>The company could potentially hit 9 figures. So its exciting.
======
muzani
You might just consider asking them directly, see how much they want. My
mentors refused to take equity; that might be the case with yours as well.

But once they give you a number, the formula is 1/(1 - n)

Meaning if they take 0.5%, they should increase the value of the company by
0.503%

If just the motivational value of talking to them can increase the value of
the company by that much, then it's a good deal.

Also from personal experience, someone who has a little financial incentive
will go out of their way to help you. Often they do anyway, but they do it for
multiple people. If they have a little ownership, they'll prioritize it more.

------
pushtheenvelope
Good job on getting a product going! Having a solid advisory team that
inspires you and motivates you through the ups and downs of a startup is very
important. This individual will hopefully help you stay focused along the way.

A common custom would be to treat her as a strategic advisor, offering 0.1-1%
equity, with vesting. Try to have some understanding of how much time they can
commit to and on what frequency.

An example doc is [https://fi.co/fast](https://fi.co/fast), but if you google
for “startup advisor agreements” you’ll find a few similar standard docs.

~~~
ecesena
I support the fi.co/fast, but I personally think it's a bit too in favor of
the startup, and real world advisory agreements may require much less effort
from the advisor.

For example the 1% is at idea stage and requires 20h/mo = avg 1h/day, which is
an insane amount.

It's more realistic to have a consistent 30min call/mo, and maybe a few extra
hours when the advisor is really needed, for example if you're brainstorming
an idea, or executing on a launch. And maybe it's worth giving them a 0.5%
even for this apparently small amount of time.

That's also more realistic for you, because you want to be prepared to talk to
your advisors, and having too many interactions is just too distracting.

Vesting, I've seen it many time as 2y no cliff vs the classical 4y + 1y cliff
for employees/founders. If you know the advisor already and she already
provided value, you have no reason to require a cliff.

Again, I support the fi.co/fast, and I'm not saying to not go with that as a
start, mine are just negotiation points to close a good advisor. Finding good
advisors is hard, they might have little time, and they may refuse the
engagement if it seems too heavy from the get go.

~~~
pushtheenvelope
I mentioned fi.co/fast as an example of an advisor agreement, rather than
endorsing its exact recommendations. I should've been more clear on that.

Many of the points you raise sound very reasonable. Thanks for sharing them!

------
gogopuppygogo
The more you offer the more you need to tie it to deliverables.

There are limitations on what a person can do without a license to raise money
on contingency but you can set goals of X number of introductions to venture
capitalists as a criteria for earning equity.

I tend to like offering 1-3% to a really accomplished person if it's very
early and they can commit time to the company.

If it's later stage 0.25 - 1% is more common.

You can also pay an Advisor with cash and lower the amount of equity.

What do you need this person for?

~~~
yazr
If you need to set your mentor performance-metrics, u should probably find
yourself someone else (I am not the down-voter). Also, 1% for later-stage?
post-VC? sounds very high.

I like this article, which describes 3 different scenarios

[https://www.inc.com/john-rampton/how-much-equity-should-
you-...](https://www.inc.com/john-rampton/how-much-equity-should-you-give-to-
a-mentor.html)

