Advisors? Worth it to give up equity?

elizaarnold·Jan 07, 2021

Hey Elphas! Wondering if any of you at the pre-seed stage think it's worth it to bring on advisors in exchange for equity. I'm torn because we have some people who would be good indicators and offer great connections (highly successful in our industry), but I hesitate to bring them on in exchange for equity. It seems to me that from an investor's perspective I would wonder why they didn't just invest in us if they believe in what we're building. Have you found having advisors is useful for raising a pre-seed round?

Iynna·Jan 07, 2021

Hi Eliza,You are thinking about it the right way as it sounds like the people you want to bring on board could bring real value (network, advice, "shiny name" to show your traction) but indeed if you have them on board and give up equity, from an investor's perspective the first question I'd have is 'did those people put in some money in the company' or what kind of value do they actually bring? So here are some questions for you: have you had this conversation with those people to begin with? What is your working relationship with them at the moment? Are they somehow giving you advice here and there/you are picking their brains ie. are they acting more as mentors?To me the more open you are with them about it the better: what exactly do you want from them and most importantly what is it you believe they will bring? Initially, I agree that if bringing them on-board means giving up equity, I would think about it pretty seriously, because unless you are already seeing some form of "return" without the formal advisor title, then it would not make much sense.

elizaarnold·Jan 09, 2021

thank you @iynna! this is very helpful and reassuring to know we're thinking of it in the right way :)

Iynna·Jan 09, 2021

Of course! Although as I explained this is not a black and white thing so I’d definitely encourage to consider some of the q above

sabina·Jan 17, 2021

I'd also add that it's always best to give them 1-year cliff if you do choose to grant them equity. This way, you can decide if it's a mutual fit for 12 months. I had done this with my advisors and we ended up terminating one but the others turned out to be the reason we launched :)