Board of Directors and Advisors

Advisory board setup and compensation

Advisory boards can be useful things—especially in the earliest phases of your startup. They are often luminaries, academics and industry experts, and having people like that who are willing to make themselves available to answer questions, provide you with insights, perspective and feedback or to merely lend some credibility to your venture can be very valuable. Calling it a “board” is a bit of a misnomer, because advisory boards rarely actually meet as a group. The amount of time they contribute is often quite limited, and they aren’t generally tasked with a specific project or deliverable like a consultant would be.

Most companies don’t compensate the members of the advisory board with any cash compensation. Rather, they will typically give each advisor a small equity grant (usually in the form of a stock option) that vests over time. While size of the grant will vary slightly from company to company, it is usually around 0.1% to 0.2% of the then outstanding equity per advisor.  

Advisors should enter into an agreement with the company in which they agree to keep the company’s information confidential and agree that the ideas they help you develop will be owned by the company. Visit our Document Generator for access to an Advisory Board Form.