Typical Startup Advisor Equity Levels

3 links
Holloway Guide ToEquity Compensation

Typical Startup Advisor Equity Levels

Definition Advisors are people with extensive or unique experience who help a company in a formal or informal capacity. It is common for startups to bring on advisors with a recognized name, specific background or skills, or access to a network. Sometimes advisors act as mentors to founders.

Startup advisor compensation is usually partly or entirely via equity. Typical equity levels vary depending on the value the advisor brings, the maturity of the company, and the level of their involvement, which can vary from occasional phone-calls or introductions all the way up to being a kind of part-time, hands-on member of the team.

Because advisors may not add value for as many years as an employee, a common vesting schedule for an advisor is two years with a three-month cliff. Advisor grants also typically have a longer exercise window post termination of service, and will usually have single trigger acceleration on an acquisition, because no one expects advisors to stay on with a company once it’s acquired.

One commonly used framework for compensation for advisors is the FAST Agreement from the Founder Institute, an accelerator that’s been involved with over 4500 companies. Their approach is to recommend compensation based on the level of engagement (from monthly meetings to hands-on projects and help with networking) and the maturity of the company (from just an idea to growth stage, which would likely mean post-Series A):

Idea StageStartup StageGrowth Stage
Standard (Monthly Meetings)0.25%0.20%0.15%
Strategic (Add Recruiting)0.50%0.40%0.30%
Expert (Add Contacts and Projects)1.00%0.80%0.60%

Source: The Founder Institute’s FAST equity compensation framework

Another source is Carta’s guide to advisor shares, which similarly shows most grants in the 0.2–1.0% range.

Both the Founder Institute and Carta’s guide offer legal templates. Founders and advisors should consult a template and a lawyer before committing to an agreement, but these levels are reasonable reference points for both sides in negotiating fair advisor compensation.

Negotiation Tips

···

When negotiating a job offer, companies will always ask you what you want for compensation, and you should always be cautious about answering.

If you name the lowest number you’ll accept, you can be pretty sure the company’s not going to exceed it, at least not by much.

You’ve been reading an excerpt of an online book. Support the authors and the ad-free Holloway reading experience by purchasing it for instant, lifetime access plus a PDF download.
If you found this post worthwhile, please share!
Get full access to this book.
This page is an excerpt of a much larger book. Get full access now.

Make sure your equity generates wealth, not a shocking tax bill.

Stock options, RSUs, job offers, and taxes—a detailed reference, including hundreds of resources, explained from the ground up, for employees and managers.

  • 80-page online book
  • 364+links and references
  • Newly updated for 2021!
  • Digital access to this title in the Holloway Reader
  • Downloadable PDF and EPUB for personal offline use
Length: 80 pages
Edition: e2.1.0
Last Updated: 2021-02-19
Language: English
ISBN (Holloway.com):
978-1-952120-03-9

Equity Compensation

by Joshua LevyJoe Wallin
Stock options, RSUs, job offers, and taxes—a detailed reference, including hundreds of resources, explained from the ground up, for both employees and managers.

Learn more.

Enter your email for more details, updates from the authors, and free samples from the book.