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A handshake, a percentage and no paperwork is how founders end up with a dead cap table entry three years later. An advisor agreement sets out the services, the vesting, and what the board actually approved.
The agreement has to identify the actual services and the expected service period. A title and a percentage is not an advisory arrangement, and it is the first thing that falls apart under scrutiny.
The standard schedule is four years with a one year cliff. For an advisor, vesting should line up with how long you actually expect them to advise, rather than conditions that have nothing to do with the services.
A grant is not issued because you agreed commercial terms over a call. It is not complete until the board approvals and the grant documents are in place.
Advisors normally land between 0.1% and 0.5% of the company.
Five things have to be true. Miss one and what you handed over is not a grant.
There has to be a bona fide, active advisory relationship. An advisor grant is not a goodwill gift to someone who is not providing services.
In place before the grant, naming the actual services and the expected service period. Everything else hangs off this document.
The recipient and the services both have to be eligible under your equity plan and the securities law exemption you are relying on. Capital raising and market making need separate analysis.
The board approves the specifics: recipient, share count, exercise price, vesting commencement date and vesting schedule. Not the idea of a grant, the grant.
Align vesting with how long you actually expect them to advise, rather than bolting on conditions that have nothing to do with the services.
What price do we grant the options at?
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All compensatory equity has to be priced at fair market value on the grant date, so get a 409A valuation before your first option grant. Price below fair market value and the advisor picks up a 20% federal penalty on top of the tax, plus another 5% in California.
Does the board really have to approve it?
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Yes. The board approves all equity grants, the same as issuing securities to an investor. For an advisor that means signing off on the recipient, the share count, the exercise price, the vesting commencement date and the vesting schedule.
Do advisors sign a PIIA?
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Get signed PIIAs from everyone before they start. A PIIA assigns the IP developed during their service and carries the confidentiality terms. If an advisor contributes a specification, a design or a piece of code, that is exactly the case it exists for.
When is the grant actually issued?
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Not when you agree terms on a call. The award is not complete until the required approvals and the grant documents are in place. Telling an advisor they already have equity before that point is the most common way this goes wrong.
What does it cost?
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From $750. Advisor paperwork sits inside our talent work, alongside employee and consultant agreements. You get a fixed fee before anything starts.
Tell us who the advisor is, what you want from them, and how long you expect it to run. You get the agreement and the board paperwork that makes the grant real.
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