Advisors Equity

Advisors Equity

December 18, 2023 by investor

Advisors Equity

Startup advisors can help a startup establish the business and find the right track to grow.

Some informal advisors help the business without any compensation.

Some formal advisors help the business but require compensation.

Advisors seeking compensation look for a small piece of equity.

Most advisors are not paid cash in the very early stages as there’s no revenue to draw from. 

Advisors typically receive 0.2% to 1.0% of a share of equity.

The range covers advisors on the low end who give advice.

Those who provide strategic value such as finding investors or C-level hires are in the mid-range.

Experts who provide domain knowledge are on the high end.

The startup undergoes many changes in the early days so an advisor is useful for two years in most cases. 

The equity is vested over two years with a three-month cliff in case the advisor doesn’t work out.

There are standard advisor agreements to paper the engagement.

Any agreement involving equity should be documented and incorporated into the cap table.

Spend time with the advisor before committing to a long-term relationship to make sure there’s a good fit.


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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.