Equity Exchange

No budget for an advisory board? It's ok--some will work for stakes.
Magazine Contributor
2 min read

This story appears in the July 2008 issue of Entrepreneur. Subscribe »

Question: I want to form a board of advisors to help start my business but don't have the money to pay them. Any ideas?
Answer: With a compelling concept and connections with industry executives, you can put together a solid advisory board.

Unlike directors of large public companies, advisors to entrepreneurial companies will often work for equity (typically options or warrants). "Most advisors are honored to build their 'BOA resume' and associate with a potential success story [in exchange for] occasional mentoring services," says Michael Weinstein, CEO of internet marketing firm Primary Systems Inc., who's served on numerous advisory boards and is a mentor in The Connecticut Technology Council's FastTrack Emerging Ventures Program.

Expect to give a board member an equity stake of up to 1 percent of your shares vesting over two to four years, Weinstein says, and the sta
ke's size may vary depending on the time and involvement expected from the advisor. In return, the board member will attend company meetings, facilitate introductions, screen management candidates and offer strategic direction.

Rosalind Resnick is founder and CEO of Axxess Business Consulting, a New York City consulting firm that advises startups and small businesses, and author of Getting Rich Without Going Broke: How to Use Luck, Logic and Leverage to Build Your Own Successful Business. Reach her atrosalind@abcbizhelp.comor through her website, abcbizhelp.com.

More from Entrepreneur

Brittney's a Certified Financial Planner who can help you manage your business and personal finances and navigate the ups and downs of starting a business.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Create your business plan in half the time with twice the impact using Entrepreneur's BIZ PLANNING PLUS powered by LivePlan. Try risk free for 60 days.

Latest on Entrepreneur