Advisor Shares

Equity granted to advisors for guidance, access, or credibility. Typically 0.1% to 1% with a 2-year vesting schedule. These grants should have clear expectations and deliverables.

Why it matters

Advisors can add real value, but equity granted poorly becomes dead weight on your cap table. Setting clear terms upfront protects both sides. Too many startups hand out advisor shares casually and end up with inactive shareholders taking up space on the cap table for years.

Every percentage point you give to an advisor dilutes founders and future investors. That dilution is worth it if the advisor is actively introducing you to key customers, helping you navigate a specific industry, or providing expertise that would otherwise cost tens of thousands in consulting fees. It is not worth it for name-brand advisors who take one call a quarter and contribute little else.

Investors also scrutinize advisor relationships during due diligence. A cap table littered with small advisor grants — especially to well-known names who aren't actually engaged — raises red flags. It signals either poor equity discipline or a pattern of trying to manufacture credibility through association.

How it works

Typical advisor grants range from 0.1% to 1% depending on the company stage and the advisor's expected involvement. Shares usually vest over 1-2 years with a monthly schedule. A 3-month cliff is common, though some arrangements have no cliff at all — reflecting the fact that advisors provide value in a more distributed, ongoing way than employees.

The FAST Agreement (Founder/Advisor Standard Template) from the Founder Institute is a widely used framework for structuring these grants. It categorizes advisors by involvement level — Standard, Strategic, or Expert — and maps each to a suggested equity range, making the negotiation straightforward for both sides.

The advisor agreement should specify the expected deliverables explicitly: how many calls per month, what introductions are expected, what domain expertise will be provided, and under what circumstances the agreement terminates. Vague agreements are how you end up with advisors who vest equity while contributing nothing.

History and origin

Advisor equity arrangements emerged from Silicon Valley's networked culture in the 1990s, where access to the right people — seasoned operators, domain experts, and well-connected investors — was often more valuable than cash. Early startups, unable to compete with established companies on salary, began offering equity stakes to attract experienced advisors who could open doors and share hard-won knowledge.

For most of the 2000s, advisor equity was entirely ad hoc. Amounts, vesting schedules, and deliverables varied wildly. Some advisors received large stakes for a few introductions; others provided years of value for minimal equity. The lack of standardization made the conversations awkward and the outcomes unpredictable.

The Founder Institute introduced the FAST Agreement around 2011 to address this problem. By publishing a standardized framework that both founders and advisors could reference, it removed the negotiation friction and created a shared vocabulary for what different advisor relationships should look like. Today, the FAST Agreement is widely used by startup attorneys and accelerators as the default starting point for advisor arrangements.

Frequently asked questions

How much equity should you give an advisor?

The standard range is 0.1% to 1%, depending on the company's stage and the advisor's expected involvement. The Founder Institute's FAST Agreement categorizes advisors into three tiers: Standard at 0.25%; Strategic at 0.5%; Expert at 1%. Pre-product companies tend to give more; post-revenue companies can give less. See our full guide: how much equity to give advisors.

What vesting schedule do advisor shares typically use?

Advisor shares typically vest over 1-2 years with a monthly schedule and a 3-month cliff (sometimes no cliff at all). This is shorter than the standard 4-year founder schedule, reflecting the different nature of the relationship.

What is the FAST Agreement for advisor equity?

The FAST Agreement (Founder/Advisor Standard Template) is a standardized framework created by the Founder Institute for structuring advisor equity arrangements. It categorizes advisors by involvement level and maps each tier to a suggested equity range, removing the awkward negotiation from the process. It is widely used by startup attorneys and accelerators.

What should an advisor agreement include?

A good advisor agreement should clearly define the expected deliverables, the equity grant amount and vesting schedule, IP assignment, confidentiality obligations, and the termination conditions. Vague agreements lead to inactive advisors who retain equity without contributing.

What happens to advisor equity if the advisor stops contributing?

This depends on your agreement. A properly structured advisor agreement with vesting protects you: if the advisor stops contributing, unvested shares do not continue to accumulate. However, whatever has already vested typically stays with the advisor. This is why short vesting periods and clear deliverables are important — they limit exposure to inactive advisors holding dead equity.

Can advisors receive cash instead of equity?

Some advisors prefer cash compensation, particularly those with many advisory engagements. Typically this means a monthly retainer or per-meeting fee. Cash-for-advice arrangements are less common in early-stage startups that have limited cash but plenty of equity. Hybrid arrangements — lower equity plus a modest retainer — are also possible.

Should early-stage startups recruit advisors?

Only if the advisor provides genuine value that you can't get elsewhere — specific domain expertise, critical introductions, or credibility with a key customer segment or investor group. Advisors recruited purely for name recognition who contribute little will become dead weight on your cap table. Treat advisor equity as carefully as any other equity grant.

Learn more

• How much equity should you give startup advisors?
• Dead equity: the silent killer of startups
• Vesting explained: cliffs, acceleration, and the schedule that protects everyone
• What investors look for in cap tables

Related terms

• Stock Options
• Vesting
• Cliff
• Sweat Equity
• Dead Equity
• Cap Table