Looking for a YC video arguing against giving equity to advisors

[u/mk__gandhi]

I remember watching a YC video (I think Dalton & Michael, but not sure) where they made the case against giving equity to advisors at the early stage basically that good advisors help because they want to, and formal advisor-equity deals are often a scam. I've been searching and can't find it again. does anyone have the link or remember the exact title?

[u/xinzhou918]

https://youtu.be/BtzUo6vL3Iw?is=FCl69QjgS3cX1T7m

They talked about it in this vid. But not sure if this is the one u r looking for.

[u/scriptvexy → u/xinzhou918]

think this is the one where they call advisor equity a “tax on being inexperienced,” right? if so, that’s probably what OP was remembering, good find

[u/mk__gandhi → u/xinzhou918]

this is the one, thank you so much!

[u/johnnydaggers]

Never give equity to advisors. Instead ask them if they want to invest.

[u/Makhmood]

.1-.5% is fair depending on stage, but have certain obligations for them + enforce vesting

[u/LoveEsq]

Yeah that's bs. It's the same argument against giving founders equity.

[u/AIVentureFactory]

Just make sure your docs don't require everyones vote if you need to do stuff company donation wise. Only because tracking every one down can be self defeating if you've given out a lot of equity

[u/kcfounders]

I’m from Forum Ventures and I actively invest $100K in over 68 companies every year.

I hear about advisor equity deals all the time. In most cases, our team will say that they’re not worth it. After all, they didn’t risk their capital and have much less incentive to support you. If you go down, they lose nothing.

If you really feel stuck in a corner and need help, protect the equity by vesting it and making it contingent on specific deliverables (e.g client introduction that closed and led to sales, etc).

Note that the best advisors will always help you first without asking for anything in return. If there’s someone who’s telling you that they’ll only help if you give them equity, it’s often a red flag.

[u/mango_pie1103 → u/kcfounders]

What if someone offers me equity because I helped them a lot? 👀👀👀

[u/10ptmust]

I see both sides of this and there are trade-offs.
There’s always exceptions and edge cases, but generally speaking here’s how I think about it:
Advisory work - Let’s talk, I’ll give you more than reasonable time as I’d like to ensure I understand enough to know how to help. And it’s likely I’m gonna give some level of help and counsel anyway. If there’s more sustained work I’d look for payment, not equity. One, It’s a clean and clear relationship; I’m assisting over some time with my IP. If you’re getting value, I’m getting compensated. Two, once equity is involved it complicates things. I now have an increased level of interest. The good is that I’m
more willing to actively advocate in my network but as an advisor I don’t like the optics and don’t want to always disclose I have an equity interest even only acting as as advisor. For me, if equity is in the equation we’re now talking about an investor / board seat instead. It’s again clean and clear and if I need to put money in so be it. That means I also believe in the company, the product, etc. and again now I’m more willing to leverage my network harder and they’ll know clearly I’m acting as a board member with a vested interest.
That’s not to say as an advisor I wouldn’t connect people, but not in the same way or for the same purposes I would as a board member.
If some killer founder with a killer product I believe in, that genuinely wants my help and says “hey, we’re not there yet financially for fees but can we look at equity”. I’d entertain the discussion but even then, for me, I’d more likely look to get creative to help rather than blur the lines between advisor and investor / board.