An impressive name offers to advise your startup. They have the right title, the right network, and they say all the right things. Flattered, you promise them advisory shares worth 2% of your company on a handshake. Six months later, they have answered two emails and made zero introductions, and that 2% is gone for good.
This happens constantly, and it is almost always avoidable. Advisory shares are one of the easiest things for a founder to get wrong, because the rules feel fuzzy and the pressure to say yes is high. This guide lays out how much equity advisors actually get, how to structure their advisory shares so the grant rewards real work, and where founders lose ownership they did not need to give away.
What Are Advisory Shares
Advisory shares are small grants of equity you give to an advisor in exchange for guidance and introductions, instead of paying them cash. Early-stage startups rarely have money to spare, so equity becomes the currency for getting help from experienced people.
An advisor is not an employee, a co–founder, or a board member. They are an outside authority who helps part-time, usually a few hours a month. Because that commitment is light compared to someone working full-time, the equity should be light too. The whole point is to align incentives: the person only wins if they help your company grow, and they earn that equity slowly over time rather than all at once.
How Much Are Advisory Shares Worth
The standard range for a single advisor is 0.1% to 1% of your company, depending on how much they help and how mature your startup is. Earlier-stage companies give more because the equity is riskier and the help is more valuable when you have little else.
To make that concrete: if your startup is worth $5 million on a post-money basis, a 0.5% grant represents roughly $25,000 in equity value today. At a $20 million valuation, that same 0.5% is worth $100,000. Small percentages are not small numbers once your company scales.
Here is a rough guide to what most people in this role expect:
| Company stage | Typical equity per advisor | What you get for it |
| Idea / pre-seed | 0.25% – 1% | A strategic name, occasional calls, sand ome introductions |
| Seed | 0.25% – 0.5% | Active help, real introductions, domain capabilities |
| Series A and later | 0.1% – 0.25% | Targeted guidance, specific connections |
It also helps to think about the type of advisor you are bringing on, since a recognizable name and a hands–on operator are not worth the same thing:
| Advisor type | Typical equity | What they bring |
| Celebrity/figurehead | 0.1% – 0.25% | A name for your deck and website; little hands-on time |
| Industry authority | 0.25% – 0.5% | Domain knowledge, credibility, occasional introductions |
| Strategic advisor | 0.5% – 1% | Active involvement, key introductions, ongoing guidance |
Two rules of thumb keep founders out of trouble. First, if you find yourself offering more than 1% to a single person, stop and ask why, because that is rare and usually a sign you are overpaying out of excitement.
Second, keep your total advisory pool under about 5% of the company across everyone combined. These grants are helpful, but they should never crowd out the equity you need for employees and yourself.
The FAST Agreement Explained
The most common way to document this kind of relationship is the FAST agreement, which stands for Founder/Advisor Standard Template. The Founder Institute created it as a free, fill-in-the-blank document, and thousands of startups use it.
The appeal is speed. Instead of negotiating a custom contract, you check a few boxes for the engagement level and equity amount, both parties sign, and you are done in minutes. A FAST agreement typically covers:
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- The exact equity percentage granted
- The expected time commitment (often one to four hours a month)
- A standard two-year vesting schedule
- A termination clause, usually allowing either side to walk away with short notice
The FAST agreement is a solid starting point, especially for a simple, low-stakes arrangement. But it is a template, not legal advice. It does not account for your specific cap table, your state’s rules, the tax treatment of the grant, or the IP and confidentiality terms a serious relationship needs. For a meaningful grant or someone who will see sensitive information, a template alone leaves gaps.
How Advisory Shares Vest
Advisory shares should always vest. Vesting means the advisor earns their shares gradually rather than owning them all on day one. This is your protection: if they disappear after two months, the vesting stops, and they keep only the small slice they actually earned.
The market standard is two-year vesting with monthly increments. Each month, the advisor earns 1/24th of the total grant. After six months, they have earned a quarter of it; after a year, half.
This vesting differs from employee vesting in two useful ways. These grants often have no cliff, or a very short one, because the relationship is lighter and you want to reward early help. They also frequently include single-trigger acceleration, meaning the remaining shares vest immediately if your company is acquired.
No one expects a part-time helper to stay on through a sale, so this is considered fair. To understand how vesting mechanics work in more detail, see our guide on founder vesting.
Consider a common scenario. A founder grants a well-known industry name 1% with no vesting, hoping the association will impress investors. The advisor takes two calls, then goes quiet. A year later, during a financing round, an investor asks why a silent outside party holds 1% of the company.
With no vesting and no written exit, the founder cannot easily claw it back, and the dead equity becomes an awkward line item in due diligence. Standard two-year monthly vesting would have limited that advisor to the small slice they actually earned.
Thinking through an advisor grant right now? A short conversation before you sign can save you a painful cap-table cleanup later. Crowley Law helps founders structure these grants correctly from the start. Schedule a consultation.
Advisor vs. Employee vs. Board Member
Founders sometimes blur these roles, but they carry very different commitments, equity levels, and legal weight.
- An advisor helps part-time, a few hours a month, for a small equity grant (0.1% to 1%). Light commitment, light equity, easy to end.
- An employee works full-time and receives a much larger grant, often vesting over four years with a one-year cliff. A first employee might get 1% or more for full-time work.
- A board member carries legal duties to the company and its shareholders. Board seats are a matter of governance and control, negotiated as part of your financing terms, not a FAST agreement.
Keep these straight. Calling someone an “advisor” while expecting board-level commitment leads to mismatched expectations and disputes later.
Advisor vs. Consultant: What’s the Difference
Founders also mix up advisors and consultants, but they are not the same thing, and the distinction affects how you pay and document them.
- An advisor offers ongoing, high-level guidance in exchange for equity. The relationship is long-term and light–touch, usually a few hours a month, and the payoff is tied to your company’s success through advisory shares.
- A consultant or contractor is hired to do a specific, defined job, like building a website or running a clinical study, and is almost always paid in cash for that deliverable. The relationship ends when the work is done.
The simple test: if you want someone’s judgment over time, that is an advisor, and equity makes sense. If you want a concrete task completed, that is a consultant and cash is usually the right tool. Mixing them up, such as giving a one–off contractor a multi-year equity stake, is a common and avoidable cap-table mistake.
For Biotech and Life Sciences Founders
Advisory relationships look different in biotech and life sciences, where a Scientific Advisory Board (SAB) is often central to the company rather than a side arrangement. An SAB brings together clinicians, researchers, and key opinion leaders whose names and judgment lend credibility with investors, regulators, and partners.
Because these members are more involved and more valuable, the structure needs more care than a one–page template provides. A few issues matter especially:
- Conflicts of interest. Academic advisors often have university affiliations and existing obligations that must be cleared against their participation.
- Intellectual property. Anyone touching your science must assign IP and respect confidentiality, or you risk ownership disputes over your core assets.
- Larger pools. Because biotech relies heavily on SABs, total advisory equity can be higher than in software, which makes disciplined documentation even more important.
We have seen life sciences founders assemble an impressive SAB on handshake terms, only to hit problems later when IP ownership and university conflicts were never put in writing. In biotech, this agreement is not a formality. It protects your core assets.
Warning Signs to Watch For
A few patterns reliably lead to regret. Watch for these:
- Giving more than 1% to one person without an exceptional, specific reason.
- No vesting. Granting equity upfront ties you to an unproductive relationship with no way out.
- Verbal agreements. “I thought we said 2%” becomes an ugly dispute. Put everything in writing.
- Paying for a name, not the work. A figurehead who looks good on your website but contributes nothing is expensive at any percentage.
- Skipping the trial period. Work together for a few weeks before granting anything. If they do not respond to messages now, they will not help you later.
The pattern underneath all of these is the same: founders move too fast because attention from an impressive person feels like validation. Slow down and treat the grant like a hire.
When You Need a Lawyer
A FAST agreement is fine for a small, simple grant. But certain situations call for an attorney rather than a template. If the grant is meaningful, if the person will access sensitive technology or data, if you are in biotech with IP and conflict issues, or if you want your advisor equity structured for the right tax treatment, a template alone will not protect you. A lawyer makes sure the equity, vesting, IP assignment, and confidentiality terms actually fit your company and hold up later.
How Crowley Law Helps with Advisory Shares
Crowley Law LLC regularly advises life sciences and technology startups on equity compensation, founder vesting, advisory boards, SAFEs, and startup financing transactions. We help founders set the right grant size, build sound vesting terms, and lock down the IP and confidentiality protections that templates leave out, so the relationship strengthens your company instead of complicating your cap table.
Getting advisory shares right early helps protect founder ownership, avoid disputes, and keep your equity working for the people who actually move your company forward. Contact Crowley Law to speak with a startup attorney, whether you are bringing on your first advisor or building a full scientific advisory board.
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Frequently Asked Questions (FAQs)
| Question | Answer |
| How much equity should I give a startup advisor? | Most advisors receive between 0.1% and 1% of the company, vesting over two years. Earlier-stage startups give toward the higher end, while Series A and later companies give less. If you are tempted to offer more than 1% to one advisor, pause and reconsider, because that is unusual. |
| What is a FAST agreement? | FAST stands for Founder/Advisor Standard Template, a free standardized advisor agreement created by the Founder Institute. You check boxes for the equity amount and engagement level, both parties sign, and the relationship is documented in minutes. It is a useful starting point but does not replace legal advice for meaningful grants. |
| Should advisory shares vest? | Yes, always. Advisory shares should vest over about two years with monthly increments, so the advisor earns shares as they contribute. If they stop helping, vesting stops, and you are not stuck having given away equity for nothing. |
| Can advisors receive stock options instead of shares? | Yes. Advisors are often granted stock options or restricted stock rather than shares outright. Options let the advisor buy in later at today’s price, while restricted stock grants the shares now, subject to vesting. The right choice depends on your company’s stage and tax situation, which is worth reviewing with counsel. |
| Are advisory shares taxable? | They can be. Equity compensation generally has tax consequences for the advisor, and the timing of those taxes depends on the type of grant. Advisors receiving restricted stock may need to consider an 83(b) election, which is filed with the IRS within 30 days of the grant and can change how and when the equity is taxed. Because the right move depends on the grant structure, both the company and the advisor should get tax advice before finalizing anything. |
| How are biotech scientific advisory board members compensated? | Scientific Advisory Board (SAB) members are usually compensated with equity, sometimes alongside modest cash or per-meeting fees for highly involved authorities. Because SAB members often have university affiliations and touch-sensitive IP, their agreements need conflict-of-interest and IP assignment terms that a basic template does not cover. |