Startup Advisor Agreement Template (FAST-Style, 2025)

A comprehensive, founder-friendly advisor agreement template for startups. This template is based on the FAST (Founder/Advisor Standard Template) framework and includes standardized equity compensation (0.25%-1% based on stage and involvement), 2-year vesting with monthly releases, and clear expectations for advisor contributions.

📋 Quick Facts

Aspect Details
Type Advisor Agreement with Equity Grant
Equity Range 0.25% - 1% of fully diluted capitalization
Vesting Schedule 2 years, monthly vesting, no cliff (standard for advisors)
Based On FAST Agreement (Founder Institute framework)
Format Word document and PDF
Customization Time 30-60 minutes
Legal Review Recommended

🎯 What This Template Includes

This advisor agreement template covers all essential terms:

✅ Advisor Role and Responsibilities

  • Expected level of involvement (standard, strategic, or expert)
  • Specific advisor duties and time commitment
  • Examples: introductions, advice, industry expertise, recruiting

✅ Equity Compensation Framework

  • Standardized equity percentages based on stage and involvement (FAST framework)
  • Number of stock options granted
  • Exercise price (typically current 409A valuation)

✅ Vesting Schedule

  • 2-year vesting period (industry standard for advisors)
  • Monthly vesting with no cliff
  • Early termination provisions

✅ Advisor Expectations

  • Frequency of meetings and communication
  • Responsiveness and availability
  • Quality of advice and introductions

✅ Confidentiality and IP

  • Protection of company confidential information
  • Assignment of any inventions created while advising
  • Non-compete and non-solicitation (limited scope)

✅ Termination

  • Either party may terminate at any time
  • Unvested equity forfeited upon termination
  • Vested equity subject to post-termination exercise period (90 days standard)

✅ Independent Contractor Status

  • Advisor is not an employee
  • No benefits, withholding, or employment taxes
  • Advisor responsible for own taxes

📊 FAST Agreement Framework

The FAST (Founder/Advisor Standard Template) is a widely-used framework created by the Founder Institute in 2011 to standardize advisor equity compensation.

Equity Compensation Matrix

Company Stage Standard Advisor Strategic Advisor Expert Advisor
Pre-Seed / Idea 0.25% 0.5% 1.0%
Seed / Startup 0.2% 0.4% 0.8%
Series A+ / Growth 0.15% 0.3% 0.6%

Advisor Involvement Levels

Standard Advisor:

  • 1-2 hours per month
  • Quarterly meetings or calls
  • Email/text responsiveness
  • Occasional introductions

Strategic Advisor:

  • 3-4 hours per month
  • Monthly meetings or calls
  • Active participation in key decisions
  • Regular introductions to customers, investors, or partners
  • Domain expertise in critical area (e.g., sales, marketing, product)

Expert Advisor:

  • 5+ hours per month
  • Bi-weekly or weekly meetings
  • Deep involvement in specific initiatives
  • Significant introductions and business development
  • Recruiting assistance
  • Industry-leading expertise directly applicable to company's core business

📈 Advisor Equity by Stage

How Much Equity to Grant

Advisor equity decreases as the company matures (because the company is less risky and needs less help relative to its value):

Company Stage Typical Equity Range Median (Carta Data)
Pre-Seed / Idea 0.25% - 1.0% 0.25%
Seed 0.15% - 0.8% 0.11%
Series A 0.10% - 0.6% 0.06%
Series B+ 0.05% - 0.3% 0.02%

Rule of thumb: The earlier the advisor joins, the more equity they receive (because they're taking more risk and providing more impact relative to company value).

📝 Advisor Agreement Template

Instructions for Customization

  1. Replace all [BRACKETED TEXT] with your specific information
  2. Choose advisor involvement level (standard, strategic, or expert)
  3. Calculate equity percentage based on company stage and involvement level (use FAST framework)
  4. Specify expected advisor duties and time commitment
  5. Set vesting schedule (2 years with monthly vesting is standard)
  6. Have your attorney review before signing
  7. Obtain Board approval for equity grant
  8. Execute the agreement and Stock Option Grant Agreement

ADVISOR AGREEMENT

This Advisor Agreement (this "Agreement") is entered into as of [INSERT DATE] (the "Effective Date"), by and between:

[COMPANY LEGAL NAME], a [STATE] [ENTITY TYPE] with offices at [ADDRESS] (the "Company"),

and

[ADVISOR NAME], an individual residing at [ADDRESS] (the "Advisor").

RECITALS

WHEREAS, the Company is engaged in [DESCRIBE BUSINESS, e.g., "developing enterprise SaaS software for team collaboration"];

WHEREAS, the Advisor has expertise in [DESCRIBE ADVISOR EXPERTISE, e.g., "enterprise sales, go-to-market strategy, and customer success"] that will be valuable to the Company;

WHEREAS, the Company desires to engage the Advisor to provide advisory services related to [SPECIFIC AREAS, e.g., "sales strategy, customer introductions, and investor relations"]; and

WHEREAS, the Advisor is willing to provide such advisory services in exchange for equity compensation as set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. ADVISORY SERVICES

1.1 Scope of Services. The Advisor agrees to provide advisory services to the Company in the following areas:

[CHECK ALL THAT APPLY AND SPECIFY DETAILS]:

  • [ ] Strategic Advice: Provide guidance on [SPECIFY AREAS, e.g., "product strategy, market positioning, competitive analysis"]
  • [ ] Introductions: Introduce the Company to potential [customers / investors / partners / employees] in the Advisor's network
  • [ ] Industry Expertise: Share insights and best practices related to [SPECIFY INDUSTRY OR DOMAIN]
  • [ ] Go-to-Market Strategy: Advise on [sales, marketing, customer acquisition, pricing]
  • [ ] Fundraising Assistance: Provide guidance on fundraising strategy and introduce the Company to potential investors
  • [ ] Recruiting Assistance: Help identify and recruit key hires, particularly [SPECIFY ROLES]
  • [ ] Board Observer or Board Member: [IF APPLICABLE] Attend Board meetings as an observer or voting member
  • [ ] Other: [SPECIFY OTHER SERVICES]

1.2 Level of Involvement. The Advisor's expected level of involvement is:

[CHOOSE ONE]:

  • [ ] Standard Advisor: ~1-2 hours per month; quarterly meetings or calls; email/text responsiveness
  • [ ] Strategic Advisor: ~3-4 hours per month; monthly meetings or calls; active participation in key decisions; regular introductions
  • [ ] Expert Advisor: ~5+ hours per month; bi-weekly or weekly meetings; deep involvement in specific initiatives; significant introductions and recruiting assistance

1.3 Meetings and Communication. The Advisor agrees to:

  • Attend [monthly / quarterly / as-needed] meetings with the Company's founders or management team (in-person, video call, or phone)
  • Be reasonably responsive to emails, calls, and messages (typically within [2-5 business days])
  • Provide thoughtful, actionable advice based on the Advisor's expertise and experience

1.4 Quality of Services. The Advisor will provide services in a professional manner, consistent with industry standards, and will devote reasonable time and effort to fulfill the advisory role.

1.5 No Guaranteed Results. The Advisor does not guarantee any specific outcomes, introductions, or results. The Advisor's obligations are limited to providing advice and making reasonable efforts to assist the Company.

2. EQUITY COMPENSATION

2.1 Stock Option Grant. In consideration for the Advisor's services, and subject to approval by the Company's Board of Directors, the Company will grant the Advisor an option to purchase [NUMBER] shares of the Company's Common Stock (the "Option"), which represents approximately [X]% of the Company's fully diluted capitalization as of [DATE].

Equity Calculation (FAST Framework):

  • Company Stage: [Pre-Seed/Idea / Seed/Startup / Series A+/Growth]
  • Advisor Involvement: [Standard / Strategic / Expert]
  • Recommended Equity: [0.25% / 0.5% / 1.0%] (adjust based on stage and involvement)

2.2 Type of Options. The Option will be Non-Qualified Stock Options (NSOs), as advisors are not eligible for Incentive Stock Options (ISOs).

2.3 Exercise Price. The exercise price per share will be $[AMOUNT], which is equal to the fair market value of the Company's Common Stock as of the grant date, as determined by the Board of Directors (based on the Company's most recent 409A valuation).

2.4 Vesting Schedule. The Option will vest over a 2-year period, subject to the Advisor's continued service, as follows:

[STANDARD ADVISOR VESTING - NO CLIFF, MONTHLY VESTING]:

  • No Cliff: Vesting begins immediately upon the Vesting Commencement Date (defined below)
  • Monthly Vesting: [1/24] of the total Option shares will vest each month over 24 months

Vesting Commencement Date: [EFFECTIVE DATE / OTHER DATE]

Example:

  • Total Option: 10,000 shares
  • Month 1: ~417 shares vest
  • Month 12: ~5,000 shares vested (50%)
  • Month 24: All 10,000 shares fully vested (100%)

[ALTERNATIVE: 2-YEAR VESTING WITH 3-MONTH CLIFF]:

  • Cliff: No shares vest during the first 3 months
  • Cliff Vesting: On the 3-month anniversary, [3/24] of the shares vest (12.5%)
  • Monthly Vesting: After the cliff, [1/24] of the shares vest each month over the remaining 21 months

2.5 Termination of Vesting. If this Agreement is terminated for any reason, vesting will cease immediately as of the termination date. The Advisor will forfeit all unvested Option shares.

2.6 Post-Termination Exercise Period. If this Agreement terminates, the Advisor will generally have 90 days from the termination date to exercise any vested Option shares. If the Advisor does not exercise within this period, the vested Option shares will expire and be forfeited. (The 90-day period may be extended in certain circumstances, as set forth in the Company's Equity Incentive Plan and the Stock Option Agreement.)

2.7 Subject to Plan and Agreement. This Option grant is subject to the terms and conditions of the Company's [EQUITY PLAN NAME, e.g., "2024 Equity Incentive Plan"] (the "Plan") and a Stock Option Agreement, which the Advisor will be required to sign upon Board approval of the grant. Please review the Plan and Stock Option Agreement carefully, as they contain important terms, including vesting conditions, exercise procedures, and tax consequences.

2.8 No Cash Compensation. The Advisor will not receive any cash compensation for services provided under this Agreement, except for reimbursement of approved expenses as provided in Section 3.

2.9 Board Approval. The Option grant is subject to approval by the Company's Board of Directors. The Company will use reasonable efforts to obtain Board approval within [30] days of the Effective Date.

3. EXPENSES

3.1 Reimbursable Expenses. The Company will reimburse the Advisor for reasonable, pre-approved, out-of-pocket expenses incurred in connection with providing advisory services, including:

  • Travel expenses (airfare, hotel, ground transportation) for Company-requested in-person meetings
  • [OPTIONAL: Meals and entertainment expenses when meeting with potential customers, investors, or partners on behalf of the Company]

3.2 Expense Approval and Documentation. The Advisor must:

  • Obtain prior written approval from [CEO / CFO] for expenses exceeding $[AMOUNT, e.g., $250]
  • Submit expense reports with receipts within [30] days of incurring the expense
  • Comply with the Company's expense reimbursement policy (if provided)

3.3 No Reimbursement for Time. The Company will not reimburse the Advisor for time spent providing advisory services (the Option grant is the sole compensation for the Advisor's time).

4. INDEPENDENT CONTRACTOR RELATIONSHIP

4.1 Independent Contractor. The Advisor is an independent contractor and is not an employee, agent, partner, or joint venturer of the Company. Nothing in this Agreement creates an employment relationship, agency relationship, partnership, or joint venture.

4.2 No Employee Benefits. The Advisor is not entitled to any employee benefits, including health insurance, retirement plans, paid time off, or other benefits provided to the Company's employees.

4.3 Taxes. The Advisor is solely responsible for paying all federal, state, and local taxes on any income received from the Company, including self-employment taxes. The Company will not withhold taxes from any payments to the Advisor and will issue a Form 1099-NEC (if applicable) for any non-equity compensation.

4.4 No Workers' Compensation. The Advisor is not covered by the Company's workers' compensation insurance.

4.5 Control. The Advisor has full control over the manner and means of performing the advisory services, subject to the general direction of the Company. The Advisor may provide services at times and locations of the Advisor's choosing.

5. CONFIDENTIALITY AND PROPRIETARY INFORMATION

5.1 Confidential Information. During the term of this Agreement, the Advisor will have access to confidential and proprietary information of the Company, including business plans, financial information, customer data, product roadmaps, trade secrets, and other non-public information (collectively, "Confidential Information").

5.2 Non-Disclosure. The Advisor agrees to:

  • Hold all Confidential Information in strict confidence
  • Not disclose Confidential Information to any third party without the Company's prior written consent
  • Use Confidential Information solely for the purpose of providing advisory services to the Company
  • Protect Confidential Information using at least the same degree of care used to protect the Advisor's own confidential information, but in no event less than reasonable care

5.3 Exceptions. Confidential Information does not include information that:

  • Is or becomes publicly available through no breach of this Agreement by the Advisor
  • Was rightfully known to the Advisor prior to disclosure by the Company, as evidenced by the Advisor's written records
  • Is rightfully received by the Advisor from a third party without confidentiality obligations
  • Is independently developed by the Advisor without use of the Company's Confidential Information

5.4 Return of Materials. Upon termination of this Agreement or upon the Company's request, the Advisor will promptly return or destroy all documents, materials, and other tangible items containing Confidential Information, and will certify in writing that the Advisor has complied with this obligation.

5.5 Compelled Disclosure. If the Advisor is compelled by law or court order to disclose Confidential Information, the Advisor will:

  • Promptly notify the Company in writing (to the extent legally permitted)
  • Cooperate with the Company's efforts to obtain a protective order or other relief
  • Disclose only the minimum amount of Confidential Information required by law

6. INTELLECTUAL PROPERTY ASSIGNMENT

6.1 Assignment of Inventions. The Advisor agrees to assign, and hereby assigns, to the Company all right, title, and interest in and to any inventions, discoveries, improvements, works of authorship, trade secrets, and other intellectual property (collectively, "Inventions") that the Advisor conceives, creates, or develops during the term of this Agreement and that:

  • Relate to the Company's current or planned business, products, or services; or
  • Result from the Advisor's access to the Company's Confidential Information or facilities; or
  • Result from work performed for the Company

6.2 Work-for-Hire. To the extent that any Inventions constitute works of authorship, the Advisor acknowledges that such works are "works made for hire" as defined in the U.S. Copyright Act, and that the Company is the author and owner of such works.

6.3 Further Assurances. The Advisor agrees to execute any documents and take any actions reasonably requested by the Company to perfect the Company's ownership of all Inventions, including executing patent applications, copyright registrations, and assignments.

6.4 Moral Rights Waiver. To the extent permitted by law, the Advisor waives any moral rights or similar rights in any Inventions.

6.5 Prior Inventions. The Advisor represents that they have disclosed in writing (attached as Exhibit A) all prior inventions or IP that the Advisor wishes to exclude from this assignment. Any Inventions not disclosed on Exhibit A will be presumed to be Company IP.

7. REPRESENTATIONS AND WARRANTIES

The Advisor represents and warrants to the Company that:

(a) Authority: The Advisor has the legal capacity and authority to enter into this Agreement and to perform the advisory services.

(b) No Conflicts: The Advisor is not party to any agreement or obligation that would conflict with this Agreement or limit the Advisor's ability to perform the advisory services.

(c) No Violations: The Advisor's performance of advisory services will not violate any law, regulation, or agreement to which the Advisor is a party.

(d) Expertise: The Advisor has the expertise, experience, and qualifications necessary to provide the advisory services described in this Agreement.

(e) No Misuse of Third-Party Information: The Advisor will not bring to the Company, or use in advising the Company, any confidential or proprietary information belonging to any third party without proper authorization.

8. RESTRICTIVE COVENANTS

8.1 Non-Competition. During the term of this Agreement and for [6 / 12] months thereafter, the Advisor will not, directly or indirectly, engage in or provide services to any business that directly competes with the Company's business.

"Directly Competes" means offering substantially similar products or services to the same target market as the Company.

Exceptions: This non-compete does not prohibit:

  • Passive ownership of less than 5% of a publicly traded company
  • Providing advisory services to companies in related but non-competing markets (with Company's prior approval)
  • Engaging in the Advisor's primary profession or business (if unrelated to the Company)

Note: The enforceability of non-compete clauses varies by state. In California, non-competes are generally unenforceable except in limited circumstances (sale of business, dissolution of partnership). Consult your attorney.

8.2 Non-Solicitation. During the term of this Agreement and for [12 / 18] months thereafter, the Advisor will not, directly or indirectly:

(a) Employee Non-Solicitation: Solicit, recruit, or hire any employee, contractor, or consultant of the Company to leave the Company or to work for any other entity.

(b) Customer Non-Solicitation: Solicit or attempt to divert any customer, client, or business partner of the Company for any business purpose that competes with the Company.

8.3 Non-Disparagement. The Advisor agrees not to make any negative, disparaging, or derogatory statements (written or oral) about the Company, its founders, employees, products, or services. This does not prohibit truthful statements required by law or in legal proceedings.

9. TERM AND TERMINATION

9.1 Term. This Agreement will commence on the Effective Date and will continue for an initial term of [1 / 2 / 3] year[s], unless earlier terminated as provided below. After the initial term, this Agreement will automatically renew for successive [6-month / 1-year] terms unless either party provides written notice of non-renewal at least [30 / 60] days before the end of the then-current term.

9.2 Termination at Will. Either party may terminate this Agreement at any time, with or without cause, by providing [30 / 60] days' prior written notice to the other party.

9.3 Effect of Termination. Upon termination of this Agreement:

(a) Vesting Ceases: Vesting of the Option will cease immediately as of the termination date. The Advisor will forfeit all unvested Option shares.

(b) Vested Options: The Advisor will have 90 days (or such other period specified in the Plan and Stock Option Agreement) to exercise any vested Option shares.

(c) Return of Materials: The Advisor will return or destroy all Confidential Information and Company property.

(d) Survival: Sections 5 (Confidentiality), 6 (Intellectual Property Assignment), 7 (Representations and Warranties), 8 (Restrictive Covenants), 10 (Indemnification), and 11 (General Provisions) will survive termination.

9.4 No Severance. The Advisor is not entitled to any severance or additional compensation upon termination of this Agreement.

10. INDEMNIFICATION

10.1 Advisor Indemnification. The Advisor agrees to indemnify, defend, and hold harmless the Company, its affiliates, and their respective officers, directors, employees, and agents from and against any and all claims, liabilities, damages, losses, costs, and expenses (including reasonable attorneys' fees) arising out of or related to:

(a) The Advisor's breach of this Agreement

(b) The Advisor's violation of any applicable law or regulation

(c) The Advisor's violation of any rights of a third party, including intellectual property rights

(d) The Advisor's gross negligence or willful misconduct in performing advisory services

10.2 Company Indemnification. [OPTIONAL] The Company agrees to indemnify the Advisor to the fullest extent permitted by law for any claims, liabilities, damages, losses, costs, and expenses (including reasonable attorneys' fees) arising out of the Advisor's service as an advisor to the Company, provided that the Advisor acted in good faith and in a manner reasonably believed to be in the best interests of the Company.

11. GENERAL PROVISIONS

11.1 Entire Agreement. This Agreement, together with the Stock Option Agreement and Exhibit A (Prior Inventions), constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, and communications (whether written, oral, or implied).

11.2 Amendments. This Agreement may be amended only by a written instrument signed by both parties.

11.3 Waiver. No waiver of any provision of this Agreement will be effective unless in writing and signed by the party against whom the waiver is sought. No waiver of any breach will constitute a waiver of any other breach.

11.4 Severability. If any provision of this Agreement is held to be invalid, illegal, or unenforceable, the remaining provisions will continue in full force and effect, and the invalid provision will be reformed to the extent necessary to make it valid and enforceable while preserving the parties' intent.

11.5 Assignment. The Advisor may not assign or transfer this Agreement or any rights or obligations hereunder without the Company's prior written consent. The Company may assign this Agreement in connection with a merger, acquisition, or sale of all or substantially all of its assets.

11.6 Notices. All notices required or permitted under this Agreement will be in writing and will be deemed given when delivered personally, sent by confirmed email, or sent by certified mail, return receipt requested, to the addresses set forth on the signature page (or such other address as a party may designate in writing).

11.7 Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of [STATE], without regard to its conflict of laws principles.

11.8 Jurisdiction and Venue. Any legal action arising out of or related to this Agreement will be filed exclusively in the state or federal courts located in [COUNTY, STATE], and the parties consent to the personal jurisdiction of such courts.

11.9 Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original and all of which together will constitute one and the same instrument. Electronic signatures (including PDF and DocuSign) will have the same force and effect as original signatures.

11.10 Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties and their permitted successors and assigns, and nothing herein will confer any right, benefit, or remedy upon any other person or entity.

11.11 Binding Effect. This Agreement will be binding upon and inure to the benefit of the parties and their respective heirs, executors, administrators, successors, and permitted assigns.

IN WITNESS WHEREOF, the parties have executed this Advisor Agreement as of the Effective Date.

COMPANY:

[COMPANY LEGAL NAME]

By: ____________________________

Name: ____________________________

Title: ____________________________

Date: ____________________________

Address for Notices: [COMPANY ADDRESS] Email: [CEO/FOUNDER EMAIL]

ADVISOR:

____________________________

Signature

____________________________

Printed Name: [ADVISOR NAME]

Date: ____________________________

Address for Notices: [ADVISOR ADDRESS] Email: [ADVISOR EMAIL]

EXHIBIT A: PRIOR INVENTIONS DISCLOSURE

The Advisor lists below all prior inventions, discoveries, or intellectual property that the Advisor wishes to exclude from the intellectual property assignment in Section 6 of this Agreement:

Invention/IP Description Date Created Status
[EXAMPLE: Mobile app for personal finance tracking] [MM/DD/YYYY] [Owned by Advisor, not related to Company business]
[EXAMPLE: Published articles on sales methodology] [MM/DD/YYYY] [Owned by Advisor, may be used in advising Company]

If the Advisor has no prior inventions or IP to disclose, the Advisor should write "None" or "N/A."

Advisor Signature: ____________________________

Date: ____________________________

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✅ Customization Checklist

Before executing your advisor agreement, ensure you've completed these steps:

  • [ ] Specify advisor's name, address, and email
  • [ ] Define advisor's area of expertise and specific services
  • [ ] Choose advisor involvement level (standard, strategic, or expert)
  • [ ] Determine equity percentage based on FAST framework (stage + involvement)
  • [ ] Calculate number of stock options
  • [ ] Set exercise price (current 409A valuation / fair market value)
  • [ ] Choose vesting schedule (2 years monthly with no cliff is standard)
  • [ ] Specify vesting commencement date (typically effective date)
  • [ ] Define expected time commitment and meeting frequency
  • [ ] Determine term length (1-3 years typical)
  • [ ] Set termination notice period (30-60 days)
  • [ ] Customize non-compete scope and duration (check state law enforceability)
  • [ ] Review expense reimbursement policy
  • [ ] Have advisor complete Exhibit A (Prior Inventions Disclosure)
  • [ ] Obtain Board approval for equity grant
  • [ ] Prepare Stock Option Grant Agreement (separate document)
  • [ ] Have your attorney review before signing
  • [ ] Execute agreement and Stock Option Grant Agreement

🔍 Key Provisions Explained

1. Equity Compensation (FAST Framework)

Why standardize advisor equity?

  • Prevents over-granting equity to advisors who provide limited value
  • Ensures fair compensation for high-value advisors
  • Provides clear benchmarks for founders

FAST Framework (Founder Institute):

  • Pre-Seed/Idea Stage: 0.25% (standard) to 1.0% (expert)
  • Seed/Startup Stage: 0.2% (standard) to 0.8% (expert)
  • Series A+ Stage: 0.15% (standard) to 0.6% (expert)

Adjustments:

  • More equity: Advisor has unique, business-critical expertise; Advisor is highly engaged (5+ hours/month); Advisor will make significant introductions or recruiting contributions
  • Less equity: Advisor provides limited time (<1 hour/month); Advisor's expertise is not directly applicable; Company already has strong internal expertise in advisor's area

2. Vesting Schedule (2 Years, No Cliff)

Why 2 years (not 4 years like employees)?

  • Advisors provide less intensive, ongoing involvement than employees
  • 2 years aligns with typical advisor tenure
  • Most value from advisors is delivered in the first 1-2 years (introductions, initial guidance)

Why no cliff (unlike employees)?

  • Advisors typically start contributing value immediately (introductions, advice)
  • Advisors are not full-time and don't require the same "trial period" as employees
  • Monthly vesting incentivizes ongoing engagement

Alternative: 3-month cliff

  • Some companies use a short cliff (3 months) to ensure the advisor relationship is working before equity vests
  • Protects against advisors who sign an agreement but don't actually provide value

Example vesting (2 years, no cliff):

  • Grant: 10,000 options
  • Month 1: ~417 options vest
  • Month 6: ~2,500 options vested (25%)
  • Month 12: ~5,000 options vested (50%)
  • Month 24: 10,000 options fully vested (100%)

3. Independent Contractor Status

Why classify advisors as independent contractors (not employees)?

  • Advisors provide limited, part-time services
  • Company does not control manner and means of work
  • No employee benefits or payroll taxes

Key factors supporting independent contractor classification:

  • Advisor has autonomy over when and how services are provided
  • Advisor provides services to multiple companies
  • Advisor uses own equipment and resources
  • Advisor is paid via equity (not salary)
  • No employment benefits provided

Misclassification risk: If the advisor is actually functioning as an employee (e.g., working full-time, taking direction like an employee), misclassification could result in back taxes, penalties, and benefits claims.

4. Confidentiality and IP Assignment

Why require confidentiality?

  • Advisors have access to sensitive company information (strategy, financials, product roadmap)
  • Advisors may advise multiple companies (including potential competitors)

Why require IP assignment?

  • If the advisor creates valuable IP while advising (e.g., marketing strategy, product features), the company should own it
  • Prevents disputes over ownership of advisor-created work product

Exception: Prior inventions or IP unrelated to the company's business (Exhibit A)

5. Non-Compete and Non-Solicitation

Non-Compete:

  • Shorter duration than for employees (6-12 months vs. 12-24 months)
  • Narrower scope (only "directly competing" businesses)
  • Enforceability varies by state (California generally does not enforce)

Non-Solicitation:

  • More widely enforceable than non-competes
  • Prevents advisor from recruiting away employees or stealing customers
  • Duration: 12-18 months is typical

Best practice: Focus on non-solicitation (more enforceable) rather than broad non-compete clauses.

6. Term and Termination

Initial Term: 1-3 years

  • 1 year: Good for testing advisor relationship
  • 2 years: Aligns with standard advisor vesting schedule
  • 3 years: For strategic advisors providing ongoing value

Auto-Renewal: Automatic renewal for 6-12 month periods unless either party provides notice

  • Prevents need to renegotiate every year
  • Either party can terminate with notice

Termination at Will: Either party can terminate with 30-60 days' notice

  • Protects company if advisor is not providing value
  • Protects advisor if relationship is not working

Effect of Termination: Vesting stops; unvested options forfeited; vested options exercisable for 90 days

💡 When to Use This Template

✅ Use this advisor agreement for:

  1. Strategic Advisors

    • Domain experts who provide ongoing guidance (sales, marketing, product, fundraising)
    • Industry veterans who can make valuable introductions
    • Advisors who will commit 1-5+ hours per month

  2. Formal Advisory Board Members

    • Advisors who attend quarterly or monthly advisory board meetings
    • Advisors who provide regular feedback on strategy and execution

  3. Early-Stage Advisors

    • Pre-seed to Series A companies
    • Advisors who join when the company is still finding product-market fit

❌ Don't use this advisor agreement for:

  1. Board of Directors Members (use board member agreement; directors have fiduciary duties and liability)
  2. Consultants Providing Specific Deliverables (use consulting agreement with project-based compensation)
  3. Part-Time Employees (use employment offer letter)
  4. Co-Founders (use founder agreement with restricted stock and 4-year vesting)
  5. One-Time Introductions or Advice (offer equity informally or use a simpler arrangement)

⚠️ Common Mistakes to Avoid

1. Granting Too Much Equity

Problem: Founders grant 2-5% equity to advisors who provide minimal value, depleting the equity pool for employees.

Solution: Use the FAST framework as a guide (0.25%-1% based on stage and involvement).

2. No Vesting Schedule

Problem: Granting fully vested equity upfront means the advisor can disappear after signing and keep all the equity.

Solution: Always use a vesting schedule (2 years with monthly vesting is standard).

3. Not Defining Expected Involvement

Problem: Vague expectations ("provide advice as needed") lead to misaligned expectations and disappointment.

Solution: Specify expected time commitment (hours per month), meeting frequency, and specific advisor duties.

4. Using 4-Year Vesting with 1-Year Cliff (Employee Schedule)

Problem: Advisor vesting schedules should be shorter than employee schedules (2 years vs. 4 years).

Solution: Use 2-year vesting for advisors (with or without a short cliff).

5. Not Having a Written Agreement

Problem: Informal advisor relationships without written agreements lead to disputes over equity, expectations, and IP ownership.

Solution: Always execute a written advisor agreement before the advisor starts providing value.

6. Granting Equity Before Board Approval

Problem: Promising equity before Board approval can create issues if the Board declines or modifies the grant.

Solution: State that equity is "subject to Board approval" and obtain approval before or shortly after signing.

7. Not Distinguishing Between Advisors and Consultants

Problem: "Advisor" and "consultant" are used interchangeably, but they have different legal and compensation implications.

Solution:

  • Advisor: Part-time, ongoing, equity-based compensation, strategic guidance
  • Consultant: Project-based, deliverable-focused, cash-based compensation, specific tasks

8. Ignoring Conflicts of Interest

Problem: Advisor also advises competing companies and shares confidential information.

Solution: Require disclosure of other advisory relationships and include non-compete/non-solicitation provisions.

📚 Related Resources

Promise Legal Resources

External Resources

💬 FAQs

How much equity should I give an advisor?

Use the FAST framework as a starting point:

Stage Standard (1-2 hrs/mo) Strategic (3-4 hrs/mo) Expert (5+ hrs/mo)
Pre-Seed 0.25% 0.5% 1.0%
Seed 0.2% 0.4% 0.8%
Series A+ 0.15% 0.3% 0.6%

Factors to consider:

  • Value of advisor's network: Can they introduce you to customers, investors, or key hires?
  • Domain expertise: How critical is their expertise to your business?
  • Time commitment: How many hours per month will they realistically contribute?
  • Stage of company: Earlier = more equity (higher risk, more impact)

Red flags:

  • Advisor asks for >1% equity (unless they're a true expert at pre-seed stage)
  • Advisor wants cash compensation (advisors are typically equity-only)
  • Advisor wants equity without vesting (always require vesting)

Should I use stock options or restricted stock for advisors?

Stock options (NSOs) are standard for advisors.

Why options (not restricted stock)?

  • No upfront cost to advisor (only pay when exercising)
  • No immediate tax for advisor (tax occurs at exercise)
  • Advisors are not founders and don't need the same ownership structure

Restricted stock is typically used for:

  • Co-founders (with 83(b) election)
  • Very early employees (employee #1-5)

What's the difference between an advisor and a consultant?

Aspect Advisor Consultant
Compensation Equity (stock options) Cash (hourly or project-based)
Relationship Ongoing, long-term (1-3 years) Short-term, project-based (weeks to months)
Services Strategic guidance, introductions, advice Specific deliverables (marketing plan, financial model, code)
Time Commitment Part-time (1-5 hours/month) Variable (10-40 hours/week for project duration)
Classification Independent contractor Independent contractor
Agreement Advisor Agreement Consulting Agreement

Use an advisor agreement when:

  • You need ongoing strategic guidance (not specific deliverables)
  • You want to compensate with equity (not cash)
  • You expect a long-term relationship (1-3 years)

Use a consulting agreement when:

  • You need specific deliverables (website, marketing plan, financial model)
  • You want to pay cash (not equity)
  • You have a short-term project (weeks to months)

Can I have multiple advisors?

Yes. Most startups have 2-5 advisors covering different areas:

  • Sales/Go-to-Market Advisor: Helps with sales strategy, customer introductions
  • Fundraising Advisor: Helps with pitch, investor introductions, term sheet negotiations
  • Product Advisor: Helps with product strategy, user experience, roadmap
  • Technical Advisor: Helps with architecture, engineering best practices (for non-technical founders)
  • Industry Expert: Provides domain-specific insights (e.g., healthcare, fintech, AI)

Be selective: More advisors ≠ better. Only add advisors who will provide significant value.

Total advisor equity: Aim to allocate 1-3% of your cap table to advisors in total.

Should advisors sign NDAs?

Yes. The advisor agreement includes confidentiality provisions, which serve the same purpose as an NDA. Advisors should:

  • Protect company confidential information
  • Not disclose information to third parties
  • Not use information for their own benefit

Additional NDA: If the advisor will have access to particularly sensitive information (trade secrets, patents, financial data), consider requiring a separate, standalone NDA before sharing that information.

Can advisors serve on the Board of Directors?

Advisors and Board Members are different roles:

Advisor:

  • Informal, strategic guidance
  • No fiduciary duty
  • No voting rights on company decisions
  • Compensated with equity (0.25%-1%)
  • Limited liability

Board Member:

  • Formal, governance role
  • Fiduciary duty to shareholders
  • Voting rights on major decisions (financing, M&A, executive compensation)
  • Compensated with equity (0.5%-2% for independent directors) or cash
  • Potential personal liability (indemnification and D&O insurance typically provided)

Board Observer: Some advisors serve as board observers (attend board meetings but do not vote). This requires a separate board observer agreement.

What if the advisor isn't providing value?

Options:

  1. Terminate the agreement: Provide 30-60 days' notice. Vesting stops; unvested equity forfeited.
  2. Reduce involvement: Renegotiate to a lower involvement level (e.g., strategic → standard) and adjust future vesting accordingly.
  3. Have a conversation: Be direct about expectations and ask how the advisor can provide more value.

Prevention: Set clear expectations upfront (time commitment, meeting frequency, specific goals) and check in quarterly to ensure the relationship is working.

Should I extend the post-termination exercise period for advisors?

Standard: 90 days to exercise vested options after termination

Extended: 7-10 years (full option term)

Considerations:

  • Pro-advisor: Extended exercise period allows advisors to wait until an IPO or acquisition to exercise (less financial burden)
  • Pro-company: 90-day exercise period prevents "option overhang" (vested options held by former advisors)
  • Tax implications: Extending beyond 90 days requires NSO treatment (advisors already receive NSOs, so no change)

Investor perspective: Investors may push back on extended exercise periods (increases dilution risk).

Compromise: Extend to 1-2 years (rather than full 10-year option term).

Do I need Board approval for advisor equity grants?

Yes. All equity grants (employees, advisors, consultants) must be approved by the Board of Directors.

Process:

  1. Execute advisor agreement (contingent on Board approval)
  2. Present advisor grant to Board for approval at next Board meeting (or via written consent)
  3. After Board approval, execute Stock Option Grant Agreement
  4. Log grant in cap table management system (Carta, Pulley, etc.)

Can I grant equity to advisors in other countries?

Yes, but with additional considerations:

  • Securities laws: Equity grants to non-US persons may trigger foreign securities law compliance
  • Tax implications: Each country has different tax treatment for stock options
  • Withholding: Some countries require withholding on option grants or exercises
  • Plan approval: Your equity plan may need to be approved or registered in the advisor's country

Consult an attorney experienced in international equity compensation before granting equity to non-US advisors.

🚀 Next Steps

  1. Identify potential advisors with expertise in critical areas (sales, product, fundraising, domain expertise)
  2. Download this template (Word or PDF format)
  3. Determine equity percentage using FAST framework (stage + involvement)
  4. Customize all sections with advisor and company information
  5. Define clear expectations for time commitment and specific services
  6. Have your attorney review before signing
  7. Execute the agreement (both parties sign)
  8. Obtain Board approval for equity grant
  9. Prepare and execute Stock Option Grant Agreement
  10. Set quarterly check-ins to ensure advisor relationship is productive

📞 Need Help?

Structuring advisor relationships and equity compensation can be complex. Promise Legal offers advisor agreement review and equity consulting for startups.

Contact us for a consultation.

This template is provided for informational purposes only and does not constitute legal advice. Consult with a qualified attorney before using this template.

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