Last year I was working through an advisor equity deal with someone named Ted.
He was being brought in as a fundraiser and sponsor outreach person for a new business. His proposed structure: 1% for the advisory role, another 1% per year if sponsorship goals hit, and 1% per $100k raised. Performance-based. On the surface, reasonable.
But I kept coming back to one question: do these incentives actually align with what the company needs?
Because equity without alignment is just a participation trophy. You can have a great structure on paper and still be pointed in the wrong direction.
That question — whether incentives align — is something I think about a lot. Because I’ve been doing a version of this myself for the last couple of years, and I’ve seen how quickly the model breaks down if you get it wrong.
The Model
I close deals as a capital connector. Specifically: I host investor dinners for startups trying to raise.
The format is simple. About 20-30 investors in a room. The founder gives a pitch. There’s food, conversation, and a group dynamic that you just can’t replicate in one-on-one investor meetings.
What happens in a room that doesn’t happen one-on-one: people see each other engaging. Someone asks a sharp question, and it signals to everyone else in the room that this deal is worth taking seriously. Investors who might have said “pass” in a private meeting lean in when they see a peer do the same. It’s a social proof mechanism, and it’s remarkably effective.
One well-run dinner can do more than ten individual meetings.
I did nine of these deals in 2025. I didn’t charge a cash fee for any of them.
Instead, I took a small position on the cap table. Advisory shares. Sometimes a fraction of a percent.
Why Not Just Take Cash
The honest answer is that I don’t need it.
Asian Efficiency has been running for over twelve years. It generates consistent cash flow. I don’t depend on consulting fees to cover my expenses, which means I can afford to make decisions based on long-term return rather than short-term income.
Cash fees are clean and immediate. You do the work, you get paid, the relationship is settled. There’s nothing wrong with that. For a lot of people doing capital connector work, it’s the only practical option.
But equity is patient. And patience compounds in a way that cash fees never do.
When you take equity, you’re betting on a different time horizon. The return might come in five years. It might not come at all. But when it works, it looks nothing like what you’d make on a fee.
The mental model I use: if I don’t believe in this company enough to own a piece of it, I probably shouldn’t be spending my network on it. Charging a fee creates a transaction. Taking equity creates alignment.
The Prerequisite
Here’s the part that usually gets left out of conversations about this kind of deal structure.
It only works if you have something else paying the bills.
That’s not a minor detail. It’s the whole thing.
Most people who do capital connector work or advisory roles take cash compensation. Not because they’re wrong about the long-term math. But because they have to. If you need the income now, you take the income now. That’s not a failure of discipline or imagination — it’s rational.
The equity-over-cash model is a luxury available to people with a stable underlying business. Without that foundation, you’re always too dependent on the current deal to play the long game. You’ll talk yourself into taking the fee every time.
This is why the sequence matters:
Build the cash flow business first.
Then you can afford to get on cap tables instead of invoicing.
The cash flow business isn’t just about money. It’s about optionality. It gives you the freedom to say no to the short money, to wait, to own pieces of things that might matter in ways you can’t predict right now.
I spent years building Asian Efficiency before I was in a position to do this kind of work. The 2025 deal flow wasn’t the strategy — it was the result of having a foundation that let me operate differently than most people in my position.
Alignment Is Still the First Question
Back to Ted’s deal.
The equity structure was reasonable. But I kept pushing on one specific piece: whether sponsorship performance should be tied to equity or considered part of the core advisory role.
My read was that sponsorship is a natural extension of what a good advisor does. Treating it as a separate equity bucket can create the wrong dynamic — the advisor optimizes for the things that generate their equity rather than the things the company actually needs most.
This is the thing about equity-based deals: the incentives have to be designed carefully. It’s not enough to just agree on a number and move on. What behaviors does this equity structure actually reward? Are those the behaviors the company needs?
When it works well, equity aligns everyone’s interests over a multi-year horizon. When it’s designed carelessly, it creates misalignment you won’t notice until it’s already a problem.
Getting on the cap table is the long play. But only if you’re playing the right game.
If you’re thinking about your own deal structures or business strategy, the weekly review is where I do most of this kind of reflective thinking — stepping back from the immediate decisions to look at the longer game.
Thanh Pham
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