Advisory capital
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Advisory capital is an investment of experience, expertise, social capital, and public authority into a company in return for some form of equity in the company. The first known use of the term is in a blog post by Stowe Boyd on February 20, 2006.[1]
An "advisory capitalist" or "advisor capitalist" is one who makes such an investment.
The parallel with venture capital is intentional. The argument is that a traditional venture capitalist provides both cash capital and advisory capital. Often venture capitalists serve as members of the board of directors for companies in which they have invested. However, some companies may need the advisory aspect and not need the cash investment. Advisory capital is aimed at filling that need. Presumably a company which does not require cash will suffer less dilution by just issuing equity sufficient to recompense the advisory capitalist than it would be taking a VC or angel investment in order to obtain the advisory services that would be bundled with that investment.
[edit] Notes and references
- ^ Advisory Capital: A New Basis For Strategic Involvement, stoweboyd.com, 20 February 2006
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