Advisor Agreements & Equity: Getting It Right from Day One

Advisors can offer tremendous value, but equity grants and role expectations must be clearly defined. A formal agreement protects both parties and aligns long-term incentives.

Why it Matters

Startup advisors can open doors, coach your team, or fill temporary skill gaps. But without clear agreements — especially around equity, roles, and time commitment — the relationship can sour fast.

Founders Checklist

Use a written Advisor Agreement before offering any equity
Define the advisor’s role, availability, and contribution
Set a vesting schedule (typically over 1–2 years)
Use restricted stock or non-qualified stock options (NSOs)
Assign IP and confidentiality obligations

Founder Fails

Promised 1% verbally > no paperwork, no vesting > friction later
Gave equity upfront > advisor disengaged after 1 meeting
Used employee option agreement > tax mismatch for advisor

When to ask for Help

Before granting equity to an advisor
If the advisor is involved in product, IP, or hiring decisions
To structure vesting schedules and termination rights
When adding an advisor to pitch decks or cap tables
If revising or terminating an existing advisor relationship

Frequently Asked Questions

Q: How much equity do advisors typically get?
A: Most receive 0.1%–0.5% depending on experience and involvement. Strategic or hands-on advisors may receive more (up to 1%).

Q: Do advisors need a vesting schedule?
A: Yes. Use quarterly or monthly vesting over 12–24 months. Include a 3-month “kick-out” clause if the relationship isn’t working.

Q: Should I pay advisors cash or equity?
A: Early-stage startups usually offer equity only. Cash is uncommon unless it’s a fractional executive role.