Startups

Get the sharpest people in tech as your advisors

Mar 30

       

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How to motivate busy industry-leading people who are no longer motivated by cash to invest their time in your startup? By giving them a reason to pay attention in the first place, and – more importantly – giving them a fair slice of the pie.

Surrounding yourself with people who can really help you is extremely important for any founder. Kair Käsper, the co-founder of Klaus, has a really good way of putting it: “Building a startup means constant decision-making. The success of any company depends on the quality and speed of those decisions. If you can have someone who has already built a successful company in the same domain guide you during the critical moments, you’ll have a much higher chance of succeeding.”

Salto Advisory Deals

Let us map your needs and match you with people behind some of the most successful tech companies such as Pipedrive, Starship, Testlio, Bolt

  • We'll set up a win-win advisory deal to align the incentives
  • Take care of all the terms and legal documentation
  • Keep track of success. Find more info here.  

Aligning incentives for a long-term relationship


Besides the track record of the advisor, good advice relies on detailed knowledge of your industry, your particular circumstance, and your product. Most one-time advice-givers don’t know your product or the context well enough to give you meaningful advice in decisive moments. That’s why a long-term relationship with an advisor who has skin in the game will make a huge difference.

“Getting an advisor on board and compensating it with equity turns an advisor into a team member,” said Kristel Kruustük, the founder of Testlio. It’s a way to have some of the most impactful people in the industry joining your team who you’d otherwise never be able to hire. 

“Having shares in the company will motivate the advisor to really dig into the different aspects of your business and help it scale. One of our advisors became so invested in Testlio that he first hired us team member who has been one of our most impactful hires and 5 years later joined Testlio as the CEO,” added Kristel.

Cash vs Equity

It is very difficult to motivate experienced leaders with hourly pay. People who are really at the top of their game need to get truly excited about your product and see a potential financial win that investing their time might have. If these two are covered the motivation will skyrocket.

“For me personally, there’s a huge difference if my advice gets compensated with money or with equity. There are basically 3 totally different levels of commitment for a) when I’m just giving one-time advice b) when I’m advising a company over a set amount of time for x amount of money) when I’m invested in a long-term advisory deal by getting actual shares in the company,” said Kair Käsper. “I’m obviously most committed when I know I’m in it for the long-haul and my small percentage can turn into six figures in 10 years.”

Kristel Kruustük added: “If you’re a busy person you have to be very selective where you invest your time. I choose to put my time only into startups that are in the fields that I’m passionate about. If my know-how is helping a company scale and my efforts are being fairly compensated, it’s a win-win.”

One of the extra benefits of bringing in industry-leading advisors who really know their field and within their field are very well connected and respected, is the network that they’ll bring along.

Advisory deal mistakes

Equity-based advisory deals are pretty common but so are the mistakes made when making such deals. There are rough industry standards for setting the terms, at least covering the basics, but as every deal is different there is no one-size-fits-all playbook.

“During my history of investing, I’ve seen many fu*#ed up cap tables because startups giving away way too much equity for not so valuable advisory deals,” said Ragnar Sass, angel investor and the founder of Pipedrive, Lift99 and Salto. Such mistakes can turn out to be critical for the company in the long run.

Below are some of the key mistakes made when doing equity-based advisory deals.

1. Choosing the wrong advisors

“You should be choosing your advisors like you are choosing a co-founder,” said Karina Univer, angel investor part of the Atomico Angel Programme. It only makes sense to get an advisor on board who’s motivated to be part of the team and can actually help to scale your business.

2. Making unfair deals

As there are no fixed rules, startups can be tricked into advisory deals that lead them to give away a too big slice of the pie and not get much in return. The average equity startups give advisors is between 0.5% and 1.2% vested over a 2 year period. If the company grows there’s a huge difference between 0.5% and 0.7%. One bad deal can limit future investment options remarkably or at least cause additional trouble when trying to fix the cap table.

3. Not setting clear terms

When making advisory deals, the terms are often left undefined. Crucial questions, such as how much time, how often and in which format will the advisor invest in the startup are left unanswered. This can lead to unmet expectations, awkward moments or souring the relationship with an advisor who could have been a major asset.

4. Wasting the opportunity

Sometimes founders are waiting for the advisor to be proactive and are simply not making the most of the advisor’s superpowers and network.

Salto Advisory Deals

We decided to roll our sleeves up and help founders not make such mistakes but make advisory deals that really help their startup grow. 

Salto Advisors are some of the most outstanding leaders in the technology sector, who have scaled companies such as Pipedrive, Skype and TransferWise. They are busy people who have very limited time and therefore rarely do advisory deals.

Many of them aren’t even listed publicly for the same reasons and are on our secret list that we’ll uncover if we see a potential match.

Want the next level advisor in your team? – Get matched