Pre Revenue/MVP Advisor Fees - I will not promote

[u/jmodio]

Hello, hello!

Looking for anyone who may have been here before!

My co-founder and I are building something bootstrapped, still pre-launch, MVP in testing. One of us is working full time, the other is focused on this full time. We’ve got about $93K cash left. I’d probably need technical support in the near term.

We recently had a call with someone who runs a well-connected retail & tech community. After one hour-long conversation (and a quick test of the product), she sent over a proposal to become a strategic advisor: $5K upfront, $2.5K/week for 10 weeks, plus 20% commission on any deals she’s “aligned to.”

I’ve worked in early-stage startups before and seen what happens when founders overextend too early. My gut says this is way off for our stage, but my co-founder is more relationship-driven and sees some value in staying connected.

Curious how others have handled this kind of situation. Have you had advisors approach this early with big retainers? How do you say no clearly without burning bridges? I barely know her.

Edit: Thanks for all the feedback! I wasn’t considering spending that kind of money. It seemed pretty outrageous when we still have just an MVP with some validation and testing, 0 revenue. My partner was like maybe we have to spend money to make money, but not like this. I couldn’t imagine explaining to an investor signing away 20% of POC or ARR up front. Or spending that kind of money. I’d need a dev before anything else to make it more production ready for an actual company to use.

[u/superminingbros]

Absolutely no. First off, she’s just trying to get some additional cashflow for her bank account. An hour conversation and a quick demo is no where near enough to know a products viability. Do not give this woman one dollar.

My recommendation, save your cash for marketing. At the end of the day, you could have the absolutely best product in the world, but if people don’t know about it, they can’t get it.

[u/modcowboy → u/superminingbros]

This right here - “advisor fees”.

Unless she has literally built an analogue product and launched it this is someone trying to take advantage.

In the startup world there’s no shortage of people who can “get you in contact with the right people”.

It always boils down to fees, or intimate knowledge of the product in exchange. They’re all scammers.

[u/LoadedRhino]

There is no way that is the best way to spend $30k at your spot. It's 1/3 of your money. Would a company with $3M spend $1M for this?

Use your money for actual dev and traction.

[u/Significant-Level178]

Advisor works for small share of your startup. Not for $. Retail and tech are two different things.

[u/StartupsAndTravel]

Her proposal ends up with you spending $15K and getting next to nothing.

$5K "up front"? What in the actual fuck?

$0 upfront, $0 a week. Commission on any deals she brings in but tightly defining what that means, and then discussion if she is performing that there is possibility of some advisor options. "I'd absolutely LOVE to give you commission on success and if it works out, I'd love to continue to align with you by giving you some upside in the form of options."

Taking this deal is a rookie move and almost certainly a terrible idea.

[u/greenpepperoni]

Never pay an advisor cash.

[u/VeggiBeets]

The 'aligned to' is what gets my goat. This person is looking to leech off whatever she can from you without necessarily driving any genuine outcomes from her expertise. Listen to the other guys above and spend on marketing and customer acquisitions. Not worth it.

Edit: spelling

[u/Illustrious-Key-9228]

Wooow I can do that for the half 😂

[u/Pitpeaches → u/Illustrious-Key-9228]

All do it for a third. Don't need to demo it, just send the money straight to my bank. In all seriousness, the other comments above this said it all

[u/Constant-Bridge3690]

Advisors of pre-funded startups usually work for about 0.5% of the equity. When you raise your first $500K, then you can pay your dev team. When you raise your first $3MM, then you can pay your sales team. G&A is contracted/fractional until your Series A.

[u/captaing1]

lol don't pay for the advisor. its a bad use of time, give her some equity. Founders Institute has a template for this but honestly this feels like a cash grab.

[u/toonoisyforyou]

Absolutely not. Prelaunch advisory is purely equity based that too <1%. Don’t waste your precious dollars on advisory that you have no idea will be beneficial for your company at such an early stage.

[u/thebigmusic]

This is a predator. You are the prey. Unusual ask. Advisors typically have a defined role and might take a point, if they add real value, vested over some years. The first customers should be founder sales. Just tell her you guys thought it over and believe you have to roll your sleeves up in the beginning and figure things out and that her services could be helpful at a latter stage as you progress, and will stay in touch. Good luck.

[u/phuckoph8]

that's a huge red flag tbh. having worked with early-stage startups on credibility building, i'd never recommend spending that kind of cash pre-revenue. a good advisor at your stage should take equity (usually 0.25-1%) or a much smaller retainer.

[u/phuckoph8]

yeah that's a pretty wild ask for pre-revenue tbh. having worked with early stage startups on building credibility, i'd say run far away from this. any advisor wanting that much cash upfront plus 20% commission is throwing up major red flags.

[u/OwnDetective2155]

Advisors are given basis points.

Don’t pay advisors straight cash.

If they can generate sales then give them 20% of the sale as commission.

That person is either new or just trying to get paid for nothing.

Sounds like your cofounder isn’t good on the business side, are you?