GUEST POST from Arlen Meyers, M.D.
As more health professionals get involved with biomedical and clinical innovation and entrepreneurship, some are becoming advisors, mavens, salespeople, consultants and connectors. As such they are hired to help potential clients or employers meet benchmarks or the next critical success factor. In many instances, that means finding investors or helping to raise money for their early-stage company, newco or startup.
The success fee model also applies to sales and marketing, where the advisor is hired to source leads, leverage their relationships and networks and work around the gatekeepers of decision makers. They only get paid if contacts eventually buy the product.
Most say they do not have money to pay a retainer or recurrent cash payment so, instead they offer equity or some form of incentive or success fee model. Unfortunately, if you are considering such an “I eat what you kill” model, it comes with some problems:
- You might be running afoul of SEC regulations concerning raising private money if you are not a registered broker dealer
- If you are compensated with equity, the vesting schedule and amounts may not be mutually agreeable
- The company might not have the business development, sales operations, CRM or customer success infrastructure or people to follow up on leads and convert them to investors and track them back to you
- The client does not give you regularly scheduled updates on performance
- The client has unrealistic expectations about your ability to raise money from members of your network
- The client does not have a valid fundraising plan with the appropriate target investors
- After making an introduction or handoff, the result is no longer related to your efforts, much like a dating service
- There may be conflicts of interest for the advisor
- You may damage your reputation or personal brand if you are not transparent about your role
- You may not have the necessary education, skills, attitudes and competencies to raise money
11. The company or CEO you work for does not have the infrastructure, people or knowledge to close deals that you have sourced or people you have referred. Here are some reasons why and what they can do about getting a bigger ROI on their digital marketing tactics.
If you are asked to help a startup raise money, keep these issues in mind before agreeing to negotiated terms and conditions. Better to find your own meals than relying on eating what someone else kills.
Image Credit: Pixabay
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