Questions

I hear of a lot of startups building their advisory board with industry experts and I'm just curious what this arrangement would look like?

I am a member of several startup and early-stage company advisory boards. As with many areas of life and business, there are not strict guidelines or standards, and the arrangements can vary widely. Factors include the type of company (and perceived potential value of the equity), the experience and / or prominence of the advisors (i.e. are they just bringing knowledge / expertise, or do they also add "clout" and open up a lot of doors?), and how early in the company a particular advisor gets involved.

However, a lot of "typical" deals for early stage companies involve .5% to 1% of equity (which vests over a year or two) in exchange for 2-5 hours a month of involvement over that period.

Many of the companies I've advised have come out of a startup accelerator program, which sets the structure of the advisor-for-equity relationship. In those cases, the entrepreneurs are giving up a total of 6% of their equity to both go through the accelerator (which also includes some seed funding) and to come out with a small board of advisors.


Answered 6 years ago

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