This deal makes sense if it's connected to revenue, not tenure.
If the contract is framed around time, then understand that you'll be just one of many hobbies for a newly retired exec who wants to feel young and important by dabbling in startups. Those nine months can go by quickly with minimal part-time participation, and then you'll have dead weight on your cap table.
A better alternative is to base their earned equity on milestones - for the next 12 months, every $100k ARR they directly bring in earns them 2% of the company, up to 10%. If they play golf while you grow the business, they get nothing. If they are a killer and bring $500k in ARR, you'll have your GTM, raise a strong Seed round at a valuation of $15-$20M, and they'll get their 10% (less the shared dillution of the Seed round).
That's a great way to put it. It makes a lot of sense. Exactly what you said there must be an incentive for him to do the work and we need a way to measure it. Thank you very much for the insights! This is super helpful.
I'm not sure how he will see this, but I think it's a good option to put on a table.
Comments
This deal makes sense if it's connected to revenue, not tenure.
If the contract is framed around time, then understand that you'll be just one of many hobbies for a newly retired exec who wants to feel young and important by dabbling in startups. Those nine months can go by quickly with minimal part-time participation, and then you'll have dead weight on your cap table.
A better alternative is to base their earned equity on milestones - for the next 12 months, every $100k ARR they directly bring in earns them 2% of the company, up to 10%. If they play golf while you grow the business, they get nothing. If they are a killer and bring $500k in ARR, you'll have your GTM, raise a strong Seed round at a valuation of $15-$20M, and they'll get their 10% (less the shared dillution of the Seed round).
That's a great way to put it. It makes a lot of sense. Exactly what you said there must be an incentive for him to do the work and we need a way to measure it. Thank you very much for the insights! This is super helpful. I'm not sure how he will see this, but I think it's a good option to put on a table.