Sweat Equity: a chance to gather the best Team

DEVOTE A PART OF YOUR EQUITY TO GATHER THE BEST SUCCESSFUL TEAM

In an interesting study on chubbybrain.com, summarizing the 20 main reasons why start-ups fail, I picked some of them that I consider the most relevant to the interest of attracting top talents into Start-ups with Sweat Equity grants as compensation. Increase the value of the team, including the Board of directors or Advisory Board may affect positively all of these issues.
 
NOT THE RIGHT TEAM
A diverse team with different skill sets was often cited as being critical to the success of a startup company.  “Expertise”, “Check and balance”, “decision-making process”, “sole at the helm” are recurrent laments. 
– A relevant Advisory Board can leverage the Strategic capacity and corporate governance –
LACK of PASSION AND DOMAIN EXPERTISE
No matter how good an idea is, a lack of passion or knowledge for a domain is a key reason for failure. 
– Have in your team, seasoned specialists or experienced and passionate professionals –
NO BUSINESS MODEL.
Even if failed founders agree that a business model is important, the lack of a business model was cited as a reason for failure in 1 case of 4. If there is not a plan to bring in more revenue than expenses, that’s a problem. 
– A relevant Advisory Board can bring you new business and revenue opportunities –
 
NOT USE OF YOUR CONNECTIONS
If you have a network (and everyone has one), it makes sense to use it. Startup entrepreneurs are often lamenting their lack of connections, but surprisingly, one of the top reasons for failure was that their own network had not been properly utilized. 
– A relevant Advisory Board can broaden networks and encompass business Vision –
 
DISHARMONIES WITH CO-FOUNDERS
Discord with a co-founder is one of the most fatal issues for a company.  So, the best way of dealing with this issue is to take a long vesting period for all major sweat equity founders. 
–  Your Advisory Board can serve as Mentor, thanks to the combined experience 
 
UNABLE TO ATTRACT INVESTORS
If there is no money out there for your idea, reassess whether there is a market for it, and reassess your approach. 
– Have recognizable names on Board can brand your Company – 
 
So do not be greedy, and think that you have the opportunity to attract top talents for your start-up by compensating them in equity.

Olivier Dellacherie, Executive Chairman, Talent4Boards Inc.

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