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Startup Advisor Agreement

An advisor agreement for a US startup, with the advisor's scope and goals, an equity grant with monthly vesting, confidentiality and invention assignment.

Updated
  • advisors
  • advisor equity
  • vesting
  • startups
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About this document

A startup advisor agreement is a contract in which an experienced person agrees to advise a young company in exchange for a small equity grant that vests while the help continues. This agreement is written for a US corporation with an equity incentive plan, and Exhibit A sets out what the advisor will actually do.

Use the startup advisor agreement for an advisor paid in equity for a few hours a month. For paid, hands-on project work, use the independent contractor agreement instead. The grant is not final until the board approves it, at a price equal to the current fair market value of the stock.

How to fill it in

  1. Agree the scope first. Fill in Exhibit A with the area of advice, meeting rhythm, introductions and three goals to review at a set month. Size the equity to match that commitment.
  2. Size and structure the grant. Enter the number of shares and its approximate percentage of the company. Choose an option or restricted stock, a vesting period such as 24 months, and whether to keep the cliff and acceleration.
  3. Remove the options you skip. Delete the bracketed choices and optional sentences you do not use, then fill in the term, notice period and governing law state.
  4. Approve the grant and sign. Sign the agreement, then have the board approve the grant using your latest 409A valuation. If the advisor buys restricted stock, remind them the 83(b) election is due within 30 days.
Startup Advisor Agreement

Notes for the company (delete before signing): Yellow marks each blank. Written for a US corporation with an equity incentive plan. Advisor grants at early-stage startups commonly fall between 0.25% and 1% of the company, depending on the company's stage and how much help the advisor gives, and often vest monthly over two years with a three-month cliff (no shares vest until three months of service). Fill in Exhibit A first, then size the grant to match it. The board must approve the grant, and the price should equal the current fair market value, usually from a recent 409A valuation.

ADVISOR AGREEMENT

This Advisor Agreement (this “Agreement”) is entered into as of [Effective date] (the “Effective Date”) by and between [Company legal name], a [State of incorporation, such as Delaware] corporation (the “Company”), and [Advisor full name] (“Advisor”).

  1. Services. Advisor shall provide the Company with the advisory services described in Exhibit A (the “Services”). Advisor shall be reasonably available to the Company as described in Exhibit A and shall use reasonable efforts to perform the Services in a professional manner.

  2. Equity. Subject to the approval of the Company’s Board of Directors (the “Board”), the Company shall grant Advisor [a nonstatutory stock option to purchase / a restricted stock award of] [Number of shares] shares of the Company’s Common Stock (the “Shares”), equal to approximately [percentage]% of the Company’s fully diluted capitalization on the Effective Date, under the Company’s [Name of equity incentive plan] (the “Plan”). The [exercise / purchase] price per share shall equal the fair market value of the Common Stock on the date of grant, as determined by the Board. The Shares shall vest in equal monthly installments over [24] months beginning on [Vesting start date], [Optional: except that no Shares shall vest until Advisor has provided [3] months of continuous service, at which time the Shares for those months shall vest,] in each case subject to Advisor’s continued service to the Company on each vesting date. [Optional: If a Change of Control (as defined in the Plan) closes while Advisor is providing Services, all unvested Shares shall vest immediately before the closing.] The grant shall be subject to the terms of the Plan and the Company’s standard form of award agreement. Advisor shall be solely responsible for all taxes arising from the grant, vesting, exercise or sale of the Shares. If Advisor receives restricted stock, Advisor understands that any election under Section 83(b) of the Internal Revenue Code must be filed within 30 days after the grant, and that filing it is Advisor’s responsibility. Except as stated in this Section 2 and Section 3, Advisor shall receive no other compensation for the Services.

  3. Expenses. The Company shall reimburse Advisor for reasonable out-of-pocket expenses incurred in performing the Services, provided that the Company approves those expenses in writing in advance.

  4. Term and Termination. This Agreement begins on the Effective Date and continues for [two years], unless terminated earlier. Either party may terminate this Agreement at any time on [Number of days] days’ written notice to the other party. Vesting of the Shares stops on termination, and any right to exercise a vested option after termination is governed by the Plan and the award agreement. Sections 2 (as to Advisor’s responsibility for taxes), 5, 6, 8 and 9 survive any termination of this Agreement.

  5. Confidentiality. Advisor shall hold in strict confidence, and shall not use except in performing the Services or disclose to any third party, any non-public information of the Company (“Confidential Information”). On termination of this Agreement, or earlier on the Company’s request, Advisor shall promptly return or destroy all Confidential Information in Advisor’s possession. Under the Defend Trade Secrets Act, 18 U.S.C. § 1833(b), Advisor will not be held criminally or civilly liable under any federal or state trade secret law for disclosing a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a sealed filing in a lawsuit or other proceeding.

  6. Assignment of Inventions. Advisor hereby assigns to the Company all right, title and interest in and to any inventions, works of authorship, ideas and other intellectual property that Advisor creates or conceives, alone or with others, in performing the Services (“Inventions”), and shall sign any documents the Company reasonably requests to evidence or perfect that assignment. Nothing in this Agreement assigns to the Company Advisor’s general skills, knowledge and experience, or any invention Advisor develops entirely on Advisor’s own time without using the Company’s Confidential Information.

  7. No Conflicts; Other Activities. Advisor represents that signing and performing this Agreement does not conflict with any agreement with, or obligation owed to, any third party, including any employer. Advisor may provide services to other companies during the term of this Agreement, provided that Advisor notifies the Company in writing before providing services to any company that competes directly with the Company, and that Advisor does not use or disclose any Confidential Information in doing so.

  8. Independent Contractor. Advisor is an independent contractor and not an employee, partner or agent of the Company, and has no authority to bind the Company or to enter into any agreement on its behalf.

  9. Miscellaneous. This Agreement is governed by the laws of the State of [State], without regard to its conflict of laws principles. This Agreement, together with the Plan and the award agreement referred to in Section 2, is the entire agreement between the parties regarding its subject matter. This Agreement may be amended or waived only in a writing signed by both parties. Advisor may not assign this Agreement. This Agreement may be signed in counterparts and delivered electronically.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

[Company legal name]

By: ______________________________

Name: [Signer name]

Title: [Signer title]

ADVISOR

______________________________

[Advisor full name]

Email: [Advisor email]

EXHIBIT A

SCOPE OF SERVICES

  1. Area of Advice. Advisor shall advise the Company on [for example: enterprise sales to hospital systems].

  2. Time Commitment. Advisor shall be available for [monthly] meetings of about [one hour] each, and shall respond to reasonable requests from the Company within [two business days].

  3. Introductions. Advisor shall use reasonable efforts to introduce the Company to up to [Number] potential [customers / partners / candidates / investors] per [quarter] whom Advisor knows personally.

  4. Other Services. [Any other help, such as reviewing the pitch deck before each fundraise, or “None.”]

  5. Initial Goals. The parties shall review progress against the following goals at the end of the [sixth] month of this Agreement: (a) [First goal]; (b) [Second goal]; and (c) [Third goal].

  6. Company Contact. Advisor shall coordinate the Services with [Contact name], [Contact title].

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Frequently asked questions

How much equity should a startup advisor get?

Usually 0.25% to 1% of the company. The Founder Institute's FAST agreement sets ranges by company stage and how involved the advisor is, with the most for an expert advisor at the idea stage. Later-stage companies grant less, because each share is worth more.

Should advisors get stock options or restricted stock?

Either works. Very early, when the stock is worth almost nothing, restricted stock lets the advisor start the capital gains clock with an 83(b) election. Later, nonstatutory stock options are more common. Advisors cannot receive incentive stock options, which are only for employees.

Do advisor shares usually have a cliff?

Often a short one. Advisor grants commonly vest monthly over two years with a three-month cliff, meaning nothing vests if the relationship ends in the first three months. Employee grants more often use four years with a one-year cliff.

Sources

  1. The Founder Institute. “FAST Agreement.” fi.co (opens in a new tab)

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