I can only think of two good reasons to do consulting while you're working on your startup:
1) You don't have enough money to survive without the income from consulting.
2) Your consulting gig will help with sales in your startup (specifically, you think the company you're consulting for will buy your product once it is built).
Even if reasons 1 and/or 2 are at play, it still is a distraction. I do consulting for reason 1, but I plan to outmode that with an upcoming angel round. I am not doing all that much consulting these days anyway, but I still feel like it is a hindrance. See a semi-recent blog post about it here:
I can think of one other good reason to consult when you're working on a start-up ---- the consulting project that you're working on is something that will teach you something that you need to know in order to make your start-up successful. There's nothing better than learning on someone else's dime. Especially if the company for which you're consulting has some particuarly smart people or cutting-edge resources that you wouldn't have access to otherwise.
1) You don't have enough money to survive without the income from consulting. 2) Your consulting gig will help with sales in your startup (specifically, you think the company you're consulting for will buy your product once it is built).
Even if reasons 1 and/or 2 are at play, it still is a distraction. I do consulting for reason 1, but I plan to outmode that with an upcoming angel round. I am not doing all that much consulting these days anyway, but I still feel like it is a hindrance. See a semi-recent blog post about it here:
http://blog.jabbik.com/2008/03/momentum.html