Equity & options
Also called advisor shares, advisory equity
Advisory shares are equity granted to an adviser in exchange for guidance rather than cash investment or full-time work, almost always as stock options or restricted stock that vest over one to two years.
An adviser agrees to give a company a defined amount of time, usually a few hours a month, in return for a small equity grant. The grant is documented in an advisory agreement and issued from the same option pool used for employees, so it dilutes existing shareholders in the same way.
Grants are small. The widely used FAST agreement from Founder Institute suggests 0.05% to 1.00% depending on the company's stage and how involved the adviser is, with the larger end reserved for pre-seed companies and advisers taking an expert or board-level role.
Vesting is shorter than for employees. A two-year schedule with monthly vesting and no cliff, or a one-year schedule for a narrower engagement, is typical. The point is that the adviser earns the equity as the relationship continues rather than receiving it up front.
Employee grants are usually four-year schedules with a one-year cliff, sized against a salary benchmark. Advisory grants are a fraction of that size, vest faster, and rarely carry a cliff because the commitment is measured in hours rather than full-time work.
Advisers are also not employees for tax or employment purposes, which is why the agreement matters. A grant made without documentation of the services expected can be difficult to claw back if the adviser stops engaging.
Between 0.05% and 1.00%. Under 0.25% is common for an adviser giving a few hours a month at a funded company; the top of the range is reserved for pre-seed companies where the adviser is deeply involved.
Yes. They are issued from the option pool, so they dilute all existing shareholders proportionally, in the same way employee grants do.
No. Advisory shares are compensation for services. An investor buys shares for cash and receives shareholder rights attached to that purchase; an adviser receives a grant that vests over time.
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