Startup Expert's Tips on Advisor Compensation

An article we liked from Thought Leader DC Palter:

How Much Should Startups Pay Their Key Advisors?

Offer stock options based on engagement, responsibilities & company stage

As a mentor or advisor to many early-stage startups, I’m often asked, “How much am I supposed to pay you?”

I’m glad you asked since most startups assume I’m happy to spend all my time helping them for free. And the truth is, for occasional advice and guidance, I don’t expect compensation beyond the satisfaction of seeing a startup moving in the right direction. So please stroke my ego every once in a while and make me feel like a hero. Let me know you’re using my advice, so I feel like my time is well-spent. I know I’m right (even when I’m not), but it’s heartening to see my advice making a difference.

However, at some point, the occasional phone call becomes a weekly zoom, and general guidance turns into a substantial commitment reaching out to potential customers, rewriting pitch decks or rethinking the company’s strategy.

While I’m honored you consider me a trusted advisor and want me to be a core member of the team, it’s starting to feel like work. And let’s be honest — your goal is to make a billion dollars, and you’re asking my help to do it.

Prior to Series A funding, the company has little cash and very few employees, and the founders have to make critical strategic decisions that will make or break the company. A few insights from people who’ve been there and done that can help you navigate the market or understand how to bring in investors can be invaluable to getting off the ground and avoiding preventable mistakes.

I don’t think anyone disputes that key advisors should be compensated. The only questions are how much and how to structure it?

Advisor Compensation

Conventional wisdom, reinforced by anecdotal evidence from my own experience, together with online sources and an informal survey on my alumni mailing list (in other words, based on a collection of random opinions), conclude that advisor compensation is typically in the range of...