Advisor Equity Agreement

Many proposals on the level of capital for the allocation of individual advisors come from anecdotal experiences. But at Carta, we have data that gives a real insight into what`s really going on. So we looked at consulting actions that were issued in 2019 for companies that raised less than $2 million. Here are the most common agreements we have seen: some agreements have a three-month pitfall, which gives the parties time to determine whether the relationship brings value and deals with. Consultants who aspire to the FAST agreement are founders and senior executives for strategic advice through advisory roles, and these consultants are generally compensated in equity. The FAST agreement is not designed for traditional project council and work-rental relationships. Experienced consultants may have a framework they`ve used before – as soon as it`s time to talk about compensation, they can provide a structure with which they are familiar. It`s up to you to determine if it makes sense to your business. If not, you work with your lawyer and advisor to find an agreement that works. If you decide to provide equity, think about the consultant`s expertise and the phase of your business when you find out the amount.

The FAST agreement is used by tens of thousands of entrepreneurs and consultants a year to build productive working relationships, business advice and support for a standardized amount of equity. This consultant agreement was established by Wilson Sonsini only for informational purposes. The FAST agreement is designed to save time and money to negotiate consulting relationships. There is only one page to complete and no legal assistance is required. Before they promise equity, it`s worth asking a potential consultant if they would invest in your business rather than take equity. Investing directly gives them more skin in the game and also sends a valuable signal to future investors. 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 2 days a month can be used as a consultant as a figurehead, someone who impresses on the pitch deck or company website, someone who actually teaches little real time (and, in our opinion, little real value) to the company, while more than 2 days a month display a ”real” commitment – and as can be seen , this commitment is duly rewarded.