What are typical advisor equity arrangements for 500 startup companies?
1 Answer
we don't have any default arrangements, however we generally recommend companies consider advisory relationships with people who 1) are NOT regular investors, and 2) have domain-specific expertise that's helpful.
equity varies by stage of company, but typically is between 0.25-1.0% for pre-seed companies, .1-.5% for post-seed companies (maybe even .01-.25% for post-A/B companies). typical structures are common stock options, vested monthly over 2 years, usually with no cliff or short-term cliff (3-6months).
again these aren't really standardized for our companies, but i've made verbal recommendations along these lines for several folks. note that i DO NOT recommend advisory structures for folks that are usually frequent investors, as that may setup questionable optics in future... however, sometimes companies may choose to give advisory roles to investors if they are value-added more than average expected investor responsibilities, or occasionally if founders would like to incentivize participation for some investors above & beyond others (or would like to sweeten deal terms for some not all, but some caution here if you aren't doing this equally among all investors).
overall, i'd consider setting aside a budget of between 0.5%-2% equity for all advisors, similar to how stock options are set aside for employees (altho there the budget is more like 10-20% per investment round).
equity varies by stage of company, but typically is between 0.25-1.0% for pre-seed companies, .1-.5% for post-seed companies (maybe even .01-.25% for post-A/B companies). typical structures are common stock options, vested monthly over 2 years, usually with no cliff or short-term cliff (3-6months).
again these aren't really standardized for our companies, but i've made verbal recommendations along these lines for several folks. note that i DO NOT recommend advisory structures for folks that are usually frequent investors, as that may setup questionable optics in future... however, sometimes companies may choose to give advisory roles to investors if they are value-added more than average expected investor responsibilities, or occasionally if founders would like to incentivize participation for some investors above & beyond others (or would like to sweeten deal terms for some not all, but some caution here if you aren't doing this equally among all investors).
overall, i'd consider setting aside a budget of between 0.5%-2% equity for all advisors, similar to how stock options are set aside for employees (altho there the budget is more like 10-20% per investment round).
