Residency Advisor
A few years ago, a mid‑career cardiologist pulled me aside after grand rounds. He’d just been offered “meaningful equity” in a digital health startup instead of a consulting fee. The founders told him it could be “life‑changing.” He wanted to know one thing: “Do these deals ever actually pay out, or is this all vapor?”
You’re not the first physician to ask that, and you definitely won’t be the last. Let me walk you through what the senior docs know and almost no one explains to you directly.
The Dirty Little Secret: Most Equity Is Worth Zero
Let me start with the punchline the founders will never say out loud in the pitch room:
Most early‑stage startup equity will be worth nothing to you. Not less than you hoped. Not “only a little.” Nothing.
I’ve watched attendings across academic centers and private groups take equity in:
- AI radiology companies
- “Uber for home visits” platforms
- Wellness apps
- “Revolutionary” telehealth plays
Five years later? The vast majority either:
- quietly died,
- got “acqui‑hired” for peanuts where common shareholders got nothing, or
- are still shambling along, private, illiquid, on investor life support.
Founders know something physicians often refuse to admit: you will overvalue lottery tickets and undervalue guaranteed money because you’ve spent your whole career chasing big delayed outcomes. Med school, residency, promotion, partnership — delayed gratification is baked into you. They use that.
So whenever you’re comparing equity vs cash, anchor yourself in this: unless it’s a late‑stage, well‑capitalized company with a real path to exit, the correct default assumption is equity = $0.
Then, if it turns into something, you’re pleasantly surprised. That mindset alone will save you from terrible decisions.
How Startup Equity Actually Works (The Part They Don’t Explain)
Founders will tell you “We’ll give you 0.25% of the company.” Sounds generous. Feels like ownership. It’s half a lie.
Here’s what’s really going on, structurally, behind the scenes.
1. Common vs Preferred: You’re Not Playing the Same Game
Investors usually get preferred shares. You’ll almost always get common shares or, more commonly, an options package that may or may not ever be “in the money.”
Preferred shares come with:
- Liquidation preferences (they get paid first if anything happens)
- Sometimes guaranteed multiples (1x, 2x their money back before anyone else sees a dime)
- Anti‑dilution protections
Common shares are the leftovers. If the company sells for barely more than what’s been invested? Founders and employees frequently get nothing.
I’ve seen the math on actual cap tables.
Example:
Total investment over time: $30M.
Startup sells for: $35M.
Preferred investors have 1x liquidation preference.
Investors take $30M off the top. Remaining $5M is split based on ownership. Add in fees, legal costs, some carve‑out for founders — by the time you get to the option holders with 0.25% or 0.5%, it’s dust.
You worked for years as “Chief Clinical Advisor” and your equity check is smaller than one good locums weekend. That’s not rare. That’s standard.
2. Vesting: You Don’t “Have” What You Think You Have
Another thing no one spells out clearly to physicians:
That 0.25%? It’s almost always vesting over 3–4 years with a 1‑year cliff.
Translation in plain language:
- You get nothing until you’ve been there a full year.
- After that, it vests monthly or quarterly.
- If they bring you on as a “strategic advisor” and the relationship fizzles after 7 months? You. Walk. With. Zero.
I’ve watched plenty of doctors enthusiastically sign “advisory board” agreements, do a few calls, a couple intros, make time for two white‑paper reviews, then either they get too busy or the startup loses interest. Equity never vests. The founders move on. The physician quietly realizes they worked for free.
3. Dilution: Your Slice Keeps Shrinking
That “0.25% of the company” is typically of the fully diluted cap table at that moment. As new funding rounds come in, your slice shrinks. It almost never goes the other direction.
I’ve seen founding physicians whose initial “5%” ended up effectively <1% by the time of exit. They still did well, but not remotely what they’d fantasized.
So if you’re offered a small percentage — like 0.05% or 0.1% — understand that this is likely going to get even smaller in any successful scaling scenario. Tiny slices of big pies can still be valuable, but don’t confuse nominal percentage with guaranteed payoff.
The Physician Value Equation: What Are You Actually Worth To Them?
You need to flip the usual mindset. Stop thinking, “Wow, they’re offering me equity!” and start thinking, “Why is equity cheaper for them than cash for me?”
Here’s what you typically bring to a startup as a physician:
- Legitimacy – Your name, CV, and hospital affiliation soften investor and customer skepticism.
- Access – To health systems, colleagues, early customers, and decision‑makers.
- Clinical judgment – To keep them from doing something obviously unsafe or ridiculous.
- Product refinement – Making sure it solves a real problem and fits into a real workflow.
Founders know this. They also know a $10,000 consulting fee is very real cash out the door, while 0.25% equity “costs” nothing today.
Ask yourself bluntly: if you were them, and you truly believed the company was going to be a unicorn, would you be handing out equity to every physician they met? Of course not. You’d hoard it.
So when they are handing out equity like candy, that’s your first red flag.
When To Take Cash, When To Take Equity, When To Take Both
Senior physicians who’ve done this a few times usually settle into a simple rule set. They might not spell it out, but I’ve heard versions of this in conference rooms at Stanford, Mayo, and random coworking spaces in Austin.
Default rule: Take cash.
If they want:
- your name and affiliation on a slide deck,
- a few Zoom calls per quarter,
- and the ability to say “we’ve got Dr. X from Big‑Name Hospital on our advisory board,”
that is marketing, not deep partnership. That’s a cash engagement. You charge a clear advisory or consulting rate.
If they can’t pay you anything in cash, but they’re spending tens of thousands on developers and designers? They’re telling you exactly how they rank your contribution.
Exception: Take equity plus cash when…
…you are core to what they’re building and they’re actually treating you accordingly.
That means:
- You’re in regular product/strategy meetings.
- They truly can’t move fast without your input.
- The agreement is structured with clear expectations, vesting schedule, and fair cash for your time.
The senior docs who hit it big with startups almost always had both: a sensible cash rate so they weren’t working for free, plus equity that ended up real. Pure equity is usually a sucker’s bet unless you’re essentially a co‑founder or joining at the very beginning.
Rare case: Take mostly equity when…
…you’re effectively joining as founding physician or true founding team member, and you’re willing to treat it like a second job, not a side hobby.
That’s not “I’ll hop on a call once a month.” That’s:
- nights,
- weekends,
- real skin in the game.
If you’re not doing that, you’re not a founder. You’re an advisor. You shouldn’t be paid like a founder.
| Category | Value |
|---|---|
| Name on deck only | 90 |
| Light advisory role | 70 |
| Heavy advisory / clinical lead | 40 |
| Founding physician role | 10 |
(Values roughly represent percentage likelihood you should push for mostly cash vs mostly equity—the more involved you are, the more reasonable it is to have equity be a meaningful component.)
The Quiet Stories You Don’t Hear on Podcasts
Everyone loves to tell the success stories on stage. You’ve heard them:
- “I took equity in this EHR add‑on and it paid for my kids’ college.”
- “I was an early advisor to X and the exit was life‑changing.”
I know some of those people. Here’s what usually gets left out.
The radiologist who “hit it big”
She joined as an early clinical advisor to an AI imaging startup. Took a mix of cash and equity. Attended real meetings. Read early studies. Put her reputation on the line to get pilot sites.
Company sells for a mid‑eight‑figure amount. The splashy headline suggests everyone got rich.
Her actual take? After dilution, vesting, taxes: roughly equal to 2–3 years of her attending salary. Very nice, yes. Life‑changing? Not in the way the slide decks suggest. Also: she put in 5–6 years of serious part‑time work.
The hospitalist whose equity vanished
He joined a “hospital at home” startup. Got 0.5% vested over 4 years. Did pro bono‑level work: late‑night calls, pitch decks, quality framework design. They raised a few rounds, burned a lot of money, then sold in a distressed deal basically equal to total capital invested.
Investors got their money back (mostly). Common shareholders got nothing. His payout: $0.
Ask him now what he’d do differently? He’ll tell you: “I’d have charged them $400–500/hour from day one and taken maybe a little equity on top for fun.”
Numbers Time: How to Actually Value What They’re Offering
Here’s how the senior people in your department quietly run the math when they get pitched.
Let’s walk a basic example.
They offer you:
- 0.25% equity, vesting over 4 years, and
- roughly 5 hours per month of your time
The company claims (because they all do) they can be a $200M–$500M exit in 5–7 years.
Best case fantasy:
$200M exit × 0.25% = $500,000 gross.
Now apply reality filters:
- Dilution: your stake might end up more like 0.1–0.15%.
- Liquidation preferences: investors get their 1x or 2x back first; effective pool for common might be smaller.
- Probability of that rosy exit? Be generous and call it 5–10% for a true early‑stage health tech startup.
So maybe your realistic expected value:
- $200M exit × 0.12% = $240,000
- 10% chance of that happening = $24,000 expected value
Spread over, say, 4 years and 60–80 hours/year of work, you’re maybe looking at an expected (not guaranteed) value on the order of $75–100/hour. And that’s with very optimistic assumptions.
Plenty of you earn more than that clinically right now. And that’s before tax, before the time sink, before the reputational risk if the product is garbage.
That doesn’t mean you should never do it. But senior physicians are ruthless about this math. Early‑career physicians often are not.
| Scenario | Expected Value | Risk Level | Time Commitment |
|---|---|---|---|
| Pure cash consulting | Known | Low | Defined |
| Cash + small equity kicker | Slight upside | Low–Med | Moderate |
| Mostly equity, minimal cash | Uncertain | High | High |
| Founding physician (heavy equity) | Very uncertain | Very High | Very High |
Contract Details Senior Docs Actually Look For
Here’s where experience really shows. The veterans don’t just ask “how much equity?” They focus on structure.
You want to be looking, very specifically, at:
- Vesting schedule – 4 years? 1‑year cliff? Any acceleration on change of control?
- Role and expectations – How many hours per month? What deliverables? Are meetings counted?
- Termination – What happens to unvested equity if either side walks away?
- IP and non‑compete – Are they trying to own your brain? Are you barred from working with similar companies?
- Cash component – Is there a retainer? Per‑meeting fee? Can you bill hourly for extra work?
Senior physicians ask for revisions. They ask for equity acceleration on sale. They push back on broad non‑competes. They insist on reasonable advisory fees.
You’d be surprised how often founders cave. They expect you not to negotiate. When you do, you signal that you’re not their naïve “free credibility” play.
The Strategic Play: Using Startups As Optionality, Not Salvation
Here’s the other thing older physicians have figured out: startups are not a “plan B career.” They’re optionality.
They treat startup work like this:
- An interesting intellectual outlet.
- A chance to learn a different world (product, venture, scaling).
- Maybe, just maybe, a medium‑sized financial upside.
They don’t assume:
“This will free me from clinical work” or “This will be my retirement plan.” That’s lottery thinking.
Another pattern I see among the smart ones:
They diversify. Not dozens of tiny, random “advisory” roles. That’s just noise. Instead, they pick 1–3 companies where:
- The problem is real and painful.
- They actually care about the solution.
- The team is competent and not just good at buzzwords.
- There’s at least a credible line of sight to someone eventually paying real money for the product.
They avoid being the physician who is “advisor to 12 digital health startups” on LinkedIn and have done exactly zero diligence on any of them.
How To Decide: A Simple Mental Checklist
Use this as your private filter when someone pitches you equity instead of cash.
| Step | Description |
|---|---|
| Step 1 | Offered startup role |
| Step 2 | Push for mostly cash |
| Step 3 | Decline or cash only |
| Step 4 | Cash plus small equity |
| Step 5 | Negotiate cash plus meaningful equity |
| Step 6 | Core role or just name? |
| Step 7 | Do you believe in team and problem? |
| Step 8 | Willing to commit real time for years? |
If at any stage you find yourself saying, “I don’t know” to the belief or time‑commitment questions, your default should be more cash, less equity.
What The Grey‑Haired Crowd Would Tell You Over Drinks
I’ve heard versions of this in too many closed‑door conversations to count. If you stripped away the polite language, here’s what your senior colleagues would actually tell you:
Don’t work for free. Your name, your time, your endorsement — those are real assets. If they’re not putting any cash on the table, they don’t value you enough.
Treat equity like a bonus, not a salary. If it hits, fantastic. But pay your bills and protect your time based on guaranteed money, not speculative paper.
One deep, serious startup gig beats six vanity advisory roles. Depth wins. Spray‑and‑pray advisory board membership is for your LinkedIn ego, not your bank account.
FAQs
1. What percentage of equity should a physician advisor typically ask for?
For a true advisor (a few hours per month, not a founding role), most reasonable ranges I see are in the 0.1%–0.5% band at early stages, depending on how critical you are and how early you join. Below 0.1% is usually not worth negotiating hard over unless the company is already clearly de‑risked. Above 0.5% as a non‑founder advisor usually only happens when you’re absolutely central to their success and joining very early.
2. Should residents or fellows ever take equity instead of cash?
You’re already being underpaid for your time. I’ve watched trainees do unpaid or underpaid “advisor” work because they’re flattered to be asked. If you’re a trainee, your default should be to protect your time and either get cash for clearly defined, limited tasks or treat any equity‑only deal as a passion project with expected value of zero. Do it to learn, not to get rich.
3. How do I know if a startup is worth hitching my name to?
Look at three things: team, traction, and truthfulness. Team: have they actually built or sold anything before, or are they just good at buzzwords? Traction: is anyone paying for this, piloting it seriously, or committing resources? Truthfulness: do their numbers, projections, and claims hold up when you ask pointed questions? If any of those three are weak, think very hard before stapling your professional reputation to their logo.
Key points: Most physician equity ends up worthless, so assume $0 and insist on fair cash for your time. If you are truly core to a company and believe in it enough to commit real years, then negotiate both cash and meaningful equity, with eyes open to dilution and risk. And above all, do not confuse being flattered by a title with being compensated for your actual value.
