Advisor Shares

Advisor shares are equity grants given to outside advisors in exchange for ongoing strategic guidance, introductions, or domain expertise. Usually issued as stock options from the option pool. Typical advisor grants range from 0.1 to 1 percent of fully diluted shares per advisor, vest over two years with no cliff, and are formalized in a short advisor agreement.

The Founders Institute's FAST agreement (Founder Advisor Standard Template) is the most widely used framework for sizing and structuring advisor grants. It indexes grants by company stage (idea, startup, growth) and advisor engagement level (standard, strategic, expert), producing recommended ranges that typically land between 0.1 and 1 percent. Engaged advisors at an idea-stage company might receive 0.5 to 1 percent for several hours of work per month, while a single named advisor at a later-stage company might receive 0.1 to 0.25 percent. Advisor shares are usually granted from the same option pool the company uses for employees and vest monthly over 24 months with no cliff, because advisors are expected to contribute immediately and the relationship can end without drama if it stops working.

Ryan's Take

Most advisor relationships are decorative. Founders hand out 0.5 percent for a brand name they hope will help with a future raise, the advisor takes a couple of intro calls, and the grant just sits there vesting. Don't pay equity for a logo on your deck. Pay it for specific, measurable help: warm intros to a defined list of customers or investors, hiring a specific role, unlocking a specific deal. Write the deliverables into the advisor agreement. If the advisor won't agree to specifics, they were never going to do specifics.

What founders get wrong: Granting advisor shares before the relationship has produced anything. A short trial period, two or three months of unpaid engagement before any equity changes hands, filters out the advisors who were only ever going to be on the deck.

Related: [Option Pool] · [Vesting] · [Cap Table] · [Founders Agreement]

FAQ

How much equity do you give an advisor? Typically 0.1 to 1 percent of fully diluted shares per advisor, sized using the Founders Institute's FAST agreement, indexed by company stage and the advisor's level of engagement.

Do advisor shares vest? Yes. The standard structure is monthly vesting over 24 months with no cliff. The shorter no-cliff schedule reflects that advisors are expected to contribute immediately and the relationship can end cleanly.

Where do advisor shares come from? The company's option pool. Advisor grants count against the same pool used for employee options, which is one reason to size advisor grants carefully and not give them out before the advisor has earned them.