Networking Archive

“Advice is judged by results, not by intentions.” Marcus Tullius Cicero, Roman Lawyer and Statesman, 106 BC – 43 BC With slight modification, Cicero’s astute quote aptly applies to the entrepreneurial world: “Startup advice should be judged by results, not by intentions.” One way to accomplish this goal is to compensate your addVisors with equity and clearly specify the tasks that they must perform in order to earn their remuneration. If their advice proves sage and the company’s value increases, then they will be duly rewarded. If the company fails, their advice is free, as it should be. The key covenants to consider when crafting your addVisory agreements include: Equity Only – ensures the addVisor’s and Company’s interests are aligned Specificity – clearly state the tasks to be performed and the minimum time requirement Restricted Stock – ideal form of equity, with no detrimental impact on your adVenture Cashless Loan – allows the addVisor to have beneficial ownership of stock, with no cash outlay Vesting – reduces your risk of parting with equity and not receiving requisite value Out Clause – motivates both parties to keep each other happy and allows either party to quickly terminate an ill-fated relationship Short Term – reflects the relatively brief duration of most addVisor relationships Each of these issues is discussed in greater depth in the following section.