How to make money advising startups
If you’re interested in diversifying your income as a therapist, consider leveraging your expertise by advising tech startups in the mental health space.
The demand for mental health services is up and investors are taking notice. According to Rock Health, $2.4B was invested in US-based digital behavioral health startups in 2020, a 160% increase from 2019 ($914.8M).
These companies need your help to avoid making costly mistakes. Having a mental health professional on their team also makes them more attractive to investors. It's a win-win.
To get a sense of the landscape, check out the GIMBHI Market Map below, divided into nine categories: interactive software; patient tools; measurement, testing, and diagnostics; provider tools; digital therapeutics; medical device; tech-enabled treatment platform; telehealth; and wellness.
One of my favorite ways to stay up-to-date on who is getting funded in the space is the On The Mind newsletter written by Daniel Tarackoff. I frequently share funding news on my Twitter if you want to follow me there.
When it comes to advising startups as a therapist, there are two ways to engage: as an advisor or as a consultant. You could also be hired as a part-time or full-time employee, but that's a much bigger commitment.
An advisor is generally paid in equity instead of cash. Depending on your performance level and stage of the company, you can expect to be compensated anywhere from 0.15% to 1% equity. Here’s a helpful breakdown from the Founder Institute.
Your equity could turn into a great payout if the company is acquired or goes public. It could also be worth nothing if the company goes out of business. It’s low risk for the startup and high reward for you.
As you go up-market, advisory positions become more honorary than anything (e.g. Esther Perel is a clinical advisor for Alma).
A consultant is generally paid hourly or on retainer. Sometimes a consultant can be paid in both cash and equity.
If you’re being paid hourly, I would charge your standard therapy hourly rate. If you’re being paid on retainer, I would charge somewhere between $2K-$3K/month depending on the stage of the company and time commitment.
The later the stage, the more access to capital the company has, and the more you can charge.
Unless you really believe in the upside potential of the company, my recommendation is to be paid in cash as a consultant over being paid in equity as an advisor.
Are you interested in advising mental health tech startups? DM me on Twitter and I’ll add you to my referral list. I'd love to help you make money.