Advisor Shares
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
Startup founders can find additional support through advisors.
Advisors are typically experienced operators who previously ran a startup and now provide coaching and consulting services.
The startup brings in an advisor to coach on areas that are unfamiliar to the founder.
They often have industry connections, sales experience, or funding contacts.
The advisor should have enough time and experience to provide value to the company.
Advisors are compensated with advisor shares.
They earn them over time through vesting with their consulting work rather than their investment dollars.
Advisors typically aren’t in a position to be an employee through lack of time on their part or lack of resources on the startup's part.
Compensating with shares incentivizes the advisor to do their best, as they’ll receive their payout when the company exits.
Equity shares paid to the advisor are typically a quarter to half of one percent of the outstanding shares.
These shares vest over a one to two-year period, typically without a cliff.
This means the shares start vesting immediately.
It’s best to sign one-year agreements and no longer, as the startup will grow and its needs will change.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.
Let’s go startup something today.
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