Table of Contents
- Types of advisors
- Who should be your Startup Advisor?
- There are a few criteria that you should consider:
Expert Advisors; By Sutter Law a San Francisco Business Law Firm.
When starting a new business, it is essential to have a board of advisors to provide guidance and advice.
A board of advisors should include individuals with different perspectives and backgrounds, such as experienced business professionals, experts in the field, and members who have experience working with startups.
It is important to have a diverse board of advisors with a variety of skills and experiences to provide the best advice.
Types of advisors
The types of advisors that should be considered for a board of advisors include financial advisors, legal advisors, marketing advisors, and technology advisors.
Financial advisors
can help provide guidance on financial matters and ensure that the business is properly funded.
Legal advisors
can help with any legal matters that may arise and advise on the best approach to take.
Marketing advisors
can help develop effective marketing strategies and ensure that the business has a solid brand presence.
Technology advisors
can ensure that the business is up to date on the latest technology and can provide guidance on the best technology solutions for the business.
Who should be your Startup Advisor?
As a San Francisco and Silicon Valley business, corporate, and transactional law firm we get asked about when and who should be on the board of advisors for your startup.
The short answer is your startup should get advisors early; a good advisor is worth their weight in gold.
Typically you will want an advisor for technical know-how; you will want an advisor for legal structuring, a financial advisor, and a marketing advisor.
You generally don’t want redundant advisors since you will be paying them in equity.
Who should be an advisor: As a general rule you want Rock Stars.
It’s worth giving .5% – 1% to someone with industry contacts, funding connections, and the knowledge to save you from making the same mistakes that others have made.
How much equity should you give an advisor: This is a trick question and it depends on the stage of your startup corporation.
There are a few criteria that you should consider:
Standard advisor
someone with skill, and knowledge but not many connections.
Idea State = .25%
Startup stage = .20%
Growth Stage =.15%
Strategic Advisor
someone who can intro you to angle investors and customers.
Idea State = .50%
Startup stage = .40%
Growth Stage =.30%
Expert Advisor
someone who has seen numerous exits has been a big shot during an IPO.
Idea State = 1%
Startup stage = .80%
Growth Stage =.60%
These are only some guidelines to help you negotiate with your prospective advisors.
If you need advice regarding your advisor or a template advisor agreement, please reach out to an experienced business law attorney at Sutter Law.
