The excellent book “Venture Deals” by Brad Feld, Jason Mendelson gives a ton of great advice, one nugget you should know is smart Entrepreneurs, even experienced ones like me, get a stable of experienced mentors.
Here’s their specific advice:
These mentors can be hugely useful in any financing, especially if they know the VCs involved.
We like to refer to these folks as mentors instead of advisers since the word adviser often implies that there is some sort of fee agreement with the company. It’s unusual for a company, especially an early stage one, to have a fee arrangement with an adviser around a financing.
Nonetheless, there are advisers who prey on entrepreneurs by showing up, offering to help raise money, and then asking for compensation by taking a cut of the deal. There are even some bold advisers who ask for a retainer relationship to help out. We encourage early stage entrepreneurs to stay away from these advisers.
In contrast, mentors help the entrepreneurs, especially early stage ones, because someone once helped them. Many mentors end up being early angel investors in companies or get a small equity grant for serving on the board of directors or board of advisers, but they rarely ask for anything up front.
While having mentors is never required, we strongly encourage entrepreneurs to find them, work with them, and build long-term relationships with them.
The benefits are enormous and often surprising. Most great mentors we know do it because they enjoy it. When this is the motivation, you often see some great relationships develop. The Entrepreneur’s Perspective Mentors are great.
There’s no reason not to give someone a small success fee if they truly help you raise money (random email introductions to a VC they met once at a cocktail party don’t count). Sometimes it will make sense to compensate mentors with options as long as you have some control over the vesting of the options based on your satisfaction with the mentor’s performance as an ongoing adviser.