Dundee Ducks

Startup Advisor Equity Agreement


Dec 20


A schedule for consultants, like you and your staff, is crucial. These agreements often have a biennial plan that is monthly without a pitfall. The decision to compensate an advisor with salary, equity, or both, often comes down to the preference of the person concerned. This does not mean that there is no striking difference in the way the different consulting roles are compensated. The amount of time a founder should expect from a consultant also varies, but 12 to 15 hours per quarter is a good rule of thumb. Access is important when a contractor needs to answer questions quickly. “The advisor should be available for a quick call or a quick idea,” says Szymanski. “It happens to me pretty well – a founder can call me on the way to a meeting, talk about their strategy and get some talk points.” The term “advisory board” is somewhat false, as consultants generally do not meet regularly as a group and do not have the legal and fiduciary responsibilities of a board of directors. Now this one surprised us! It seems that there is a very clear separation in the remuneration of counsellors who work more than two days a month and for those who work less.

Two days a month seem to be a turning point – less than two days a month, a commitment as a consultant can be used as a figurehead, someone who impresses on the pitch deck or company website, someone who, in fact, teaches little real time (and, in our opinion, little real value) to the company, while more than two days a month display a “real” commitment – and as you can see, this commitment is correctly rewarded. Avoid a four-year schedule, as most consultants will provide most of their value in advance. You can still visit this relationship after a year or two and see if you want to continue. Creating an active startup committee can help start-up creators fill the know-how and lack of experience, but as Schmorak has learned, there are pitfalls to avoid. As a result, we created “FAST” (Founder / Advisor Standard Template), which defines the standard conditions and allows you to define a consultant agreement by simply crossing a few boxes and signing the polka dot line. The aim is to encourage greater cooperation between experienced creators and new founders, both within the founding institute and a-out. Here`s a density plot of NSO and RSA consultants agreements for companies on Carta in 2019, which have raised less than $2 million. Axis X represents the fully diluted percentage of a business. The lines have been standardized, so that it appears that option agreements have been established in the areas described above, but they are not common. Startups often use consultants to help with strategy, product, lead production or credibility with potential investors. Unfortunately, many startups report that their advisors have not been as helpful as expected, and they have given too much equity to someone who is not deserved.

Here you will find how to use the most consultants while avoiding some pitfalls. But distributing equity, even to close consultants, is something that founders must do conscientiously. “Basically, you create a job description,” Clayton says, “and you want to run errands for consultants.” For example, if this is your first fundraiser, it might be helpful to have the ear of someone who has done it several times.