The responsibility of the advisor is to help raise $100k.
Having been in the position as an advisor, this is what I think an advisor expects:
a. Equity Ownership. This depends upon how much involved an advisor into the start-up.
b. A flat fee and a percentage pie on every transaction the stat-up makes(Not the profit margin)
c. At my early stage, all I want is a testimonial from start-up n how I helped this business. In my early stages of adviosrship, I want good customer testimonials. This is a win-win situation for both of us. I get to learn from him many things which I couldn't have done myself.
d. It is strategic importance to my own idea and I would love this company to scale and raise the funding and in this case I would expect a contract from the company which I helped.
The answer provided here that suggests an advisor should earn a fee and a "percentage pie" is simply ludicrous. But it's also unrealistic to expect an advisor to be responsible for raising angel money. While 3rd party fundraisers and financial advisors do appear in some transactions at much later-stage companies, it would not be a good sign for an advisor to be actually fundraising at the Angel stage.
The advisor can (and should be able to) make introductions but an introduction is just the beginning. An angel is making the decision based on their interaction with the founder.
Happy to talk through more details in a call.
Advisor compensation is variable. It is as variable as the different kinds of new ventures in existence.
The company's strategic plans and their funding approach are important considerations. Consider that 99% of companies do not raise venture capital - popular media would have us believe it is the only way to build a company, and it is actually a very small number that go that route (by design or default).
The fundamental considerations are the design of the advisory board, it's mission, goals, meeting schedules, lengths of term, caliber of the advisor and ultimately the companies expectations of its advisors. The compensation needs to be commensurate with those plans and expectations.
Compensation considerations include: retainers, fees for each meeting attended, lodging and travel costs.
Forms of compensation include: cash, options, warrants, phantom stock or value participation rights which may have a predefined payout with change of control or significant funding event or etc. And they may include a combination of any of these forms.
Compensation value ranges from $2500 to $10,000 per quarter ($10,000 to $40,000 per year) and may be distributed with a mix of cash and equity forms. Cash is a scarce resource in most startups and therefore deferred compensation and/or equity become most popular or most heavily weighted in the mix.
Side note: NACD publishes annual survey results of Board of Director (as opposed to advisory board) compensation packages. They are much higher, because of the fiduciary responsibility of serving on a BOD, that is not present in the advisory board. Still it helps serve as a benchmark of sorts.
At the end of the day as an entrepreneur, CEO, or founder that is planning to establish an advisory board, you need to realize that you are seeking wisdom, network, time and resources from a person having some sort of domain expertise.
What you really hope for, is to develop a long term relationship with that person and it all begins with a well thought out and well designed advisory board program.
I'm happy to discuss further >>
