An experienced advisor—who has had two to three successful exits—has offered to help. He would lead the deck creation, handle pitching, and raise approximately $4–5 million from his network(other VCs). If his health permits, he may also join the company full-time afterward.
What would be an appropriate compensation structure in this situation? He is asking for 5% equity and 5% cash compensation.
Is that real green cash in the bank or pie in the sky promises?
Does 5% cash comp mean they’re going to get 5% of the raise amount? No VC would be ok with 5% of their investment going str8 to a middleman - if they find out.
That’s coming out to maybe 2-3 months of your runway gone immediately.
Beyond that the CEO of the startup is responsible for raising capital - you must build that skills from the beginning.
(Raising $2m on a $10m cap safe is not too hard if you’re serious about it and have some interesting insight)