4.11Legal and corporate structure

Advisor agreements (FAST template)

Stage: Pre-seedCore

1. The core idea#

A good advisor can save a deeptech startup a year: the retired fab manager who knows why your yield is stuck, the regulator-turned-consultant who knows which pathway your device fits, the operator who has sold to utilities before. A bad advisor costs equity and gives a name on a slide.

The difference is mostly in how you set the relationship up. Treat an advisor like a small, part-time hire with a defined job: a clear scope, a modest grant that vests over time, a written agreement that assigns IP and protects confidential information, and a review after a few months.

The most widely used starting point is the FAST agreement (Founder/Advisor Standard Template) from the Founder Institute. It is free, short, and sets equity by two things: how mature the company is and how involved the advisor will be. It is useful mainly as a shared reference, so neither side has to negotiate from scratch. But real-world grants are now well below the FAST grid, so use it as a ceiling rather than a target.

The rules of thumb:

  • Fewer, more involved advisors beat a long list. The median pre-priced startup on Carta has one or two.
  • Equity should match work you can describe, not fame.
  • Always vest. Usually two years, monthly, with a short cliff.
  • Get IP and confidentiality in writing, especially from technical advisors, who are the ones most likely to have ideas you later patent.

Who this is for: founders recruiting their first advisors or an advisory board; anyone who has promised equity to a helper on a handshake; anyone whose investors are asking about the advisors on the deck.

Pairs with: 2.12 (a professor as co-founder, adviser or CSO), 4.09 and 4.10 (employees and contractors), 4.08 (cap table) and 5.01 (option pool).

2. What the evidence says#

The FAST grid. Version 2 (updated August 2020) recommends these grants of fully diluted equity, vesting monthly over two years with a three-month cliff:

Involvement Idea stage Startup stage Growth stage
Standard: monthly meetings 0.25% 0.20% 0.15%
Strategic: plus recruiting 0.50% 0.40% 0.30%
Expert: plus contacts and projects 1.00% 0.80% 0.60%

The Founder Institute also notes that some technology startups set aside a pool of around 5% for an advisory board in total. That is much more than most companies need today. What companies actually grant is lower. Carta tracks tens of thousands of advisor grants, mostly from US companies:

Stage 25th percentile Median 75th percentile 90th percentile
Pre-seed 0.09% 0.24% 0.50% 1.00%
Seed 0.06% 0.12% 0.25% 0.49%
Series A 0.02% 0.05% 0.11% 0.25%

The 2025 pre-seed median was 0.24%; 64% of pre-seed advisors got under 0.3%, and only about one in ten reached 1%. Medians have drifted down for several years, from about 0.275% to 0.225% at pre-seed and 0.165% to 0.129% at seed in Carta's comparison. So a FAST "expert" grant of 1% at idea stage is a top-decile grant in practice.

Deeptech advisors get a bit more. Carta has reported higher pre-seed medians for hardware than SaaS advisors, and 0.29% for biotech against 0.20% for SaaS in its 2023 data. That fits the work: a deeptech advisor often contributes technical judgement that is hard to buy, and sometimes contributes to inventions.

Investors notice advisor lists. Paul Graham has argued that a long list of advisors at preseed is a warning sign rather than a strength, because it suggests the founders are collecting names instead of building. The Carta data shows a growing share of pre-priced startups with no advisors at all. What investors look for is one or two advisors with an obvious, specific role.

Why vesting and a cliff matter. Advisory relationships tend to be front-loaded: most of the value comes in the first months, then contact fades. Two years of monthly vesting matches that pattern. A three-month cliff lets you end a relationship that is not working before any equity vests.

IP risk is real for technical advisors. If an advisor suggests the key idea in a patent claim, they may be a legal co-inventor. Without a written assignment, a co-inventor in the US can license the patent to anyone without your consent (35 U.S.C. §262). The FAST agreement includes IP and confidentiality terms for this reason, but they are short. Check them against 4.09 before relying on them for a technical advisor.

3. The method#

Step 1: Decide what job you need done#

Before approaching anyone, write one line on the gap: "We need someone who has scaled a roll-to-roll coating line from pilot to 10,000 m² a month", not "We need industry advisors." Typical deeptech advisor roles:

  • Technical: a process, manufacturing or materials expert who reviews designs and spots dead ends.
  • Regulatory or clinical: someone who knows the approval pathway (FDA, CDSCO, MHRA, aviation or nuclear regulators).
  • Market: a former buyer or operator in your first customer segment who can open doors and tell you what procurement actually needs.
  • Fundraising: occasionally useful, but most investors would rather hear from you, and they discount advisors whose main role is introductions.

Step 2: Trial first, then grant#

Work together for one to three months informally: a few calls, one real problem. If the advisor adds value and turns up, offer an agreement. If not, thank them and move on. The FAST three-month cliff does the same job inside an agreement.

Step 3: Size the grant#

Start from the Carta medians and adjust:

Advisor type Typical pre-seed Typical seed
range range
Monthly call, occasional email 0.10–0.25% 0.05–0.15%
Several hours a month, intros, reviews 0.25–0.50% 0.10–0.25%
Deep involvement, a few days a month, rare
expertise		 0.50–1.00% 0.25–0.50%

Keep total advisor equity small, usually 1–2% across all advisors before seed, and take it from the option pool (5.01) so investors see it planned for. A paid consulting arrangement is often better for heavy, defined work: pay a day rate for the projects and keep equity small.

Step 4: Write the agreement#

Use FAST or your lawyer's short advisor agreement. Check it has:

  • Scope: expected time (for example 2–4 hours a month), the areas of help, and how you will ask for it.
  • Equity: the number of shares or options (not just a percentage), the type, the strike price or purchase price, and the vesting schedule (two years monthly, three-month cliff).
  • Acceleration: FAST gives full acceleration on a sale of the company. Many investors and lawyers prefer none, or double-trigger only. Decide deliberately.
  • IP assignment and confidentiality: "hereby assigns" anything the advisor creates for the company or that relates to the company's field and comes from its confidential information. Exclude the advisor's own unrelated work and their employer's rights.
  • Conflicts: the advisor discloses other roles, and confirms that advising you does not breach their employer's or university's rules.
  • Termination: either side can end it with short notice; unvested equity lapses.
  • No authority: the advisor cannot bind the company or present themselves as an employee.
  • Expenses: pre-approved only.

Step 5: Manage and review#

Set a short check-in every quarter: what did we ask for, what did they do? At the end of the vesting period, decide whether to renew with a small new grant, move them to the board, or end it with thanks. Remove inactive advisors from the deck.

Worked example#

HelioFab, a pre-seed perovskite solar startup in Chennai with a Delaware parent, has two candidate advisors:

  • Dr Rao, a retired process engineer from a large thin-film manufacturer. He offers two half-days a month on the pilot line and design reviews.
  • Ms Lee, a well-known cleantech founder in California, who offers to "help with fundraising".

What HelioFab does:

  1. A six-week trial with Dr Rao fixes a lamination defect that had cost two months. HelioFab offers him 0.6%, between the FAST "expert" grid figure (1.0%) and the Carta pre-seed 75th percentile (0.5%), justified by the hands-on work. He gets nonqualified options in the Delaware parent, vesting monthly over two years with a threemonth cliff, double-trigger acceleration only, and a full IP assignment.
  2. Ms Lee is offered a different deal: 0.15% with the same vesting, and the founders ask her for three specific introductions in the first quarter. She agrees.
  3. After two quarters Ms Lee has made one introduction and stopped replying. HelioFab ends the agreement; about 0.04% has vested and the rest returns to the pool.
  4. At seed, the lead investor's diligence finds that Dr Rao is named as a co-inventor on one provisional patent. Because his agreement assigns IP, the chain of title is clean.

4. Country notes: how to give an advisor equity#

India (Pvt Ltd) US (Delaware C-corp) UK (Ltd)
Usual
instrument		 Phantom stock or stock
appreciation rights
(cash-settled), or a
grant from a foreign
parent		 Non-qualified stock
options (NSOs) or
restricted stock
(RSAs), under the
equity plan and Rule
701		 Unapproved options or
growth shares
Not
available		 ESOPs under the
Companies Act
(employees and
directors only); sweat
equity (employees and
directors only)		 Incentive stock
options (ISOs), which
are for employees only		 EMI and CSOP, which
are for employees only
Pricing Any share issue needs
a registered valuer's
report; issuing below
fair value is taxable
income for the
recipient		 Strike price at or
above 409A fair
market value		 HMRC valuation
advisable; growth
shares need a hurdle
set at current value
India (Pvt Ltd) US (Delaware C-corp) UK (Ltd)
Tax timing Phantom payout taxed
as income when paid		 NSO: tax on the
spread at exercise.		 Usually taxed when
options are exercised;
RSA: file an 83(b) take advice on whether
election within 30 income tax or capital
days to be taxed on
today's low value		 gains tax applies

India. The Companies Act limits ESOPs to employees and directors (including whole-time directors and, for startups, some promoters). That leaves three practical routes for an outside advisor:

  • Phantom stock or SARs. A contract to pay cash equal to the value of a number of shares at a sale or IPO. Simple and flexible, but it is a cash liability, and investors will want it counted in the fully diluted cap table.
  • Appointing the advisor as a non-executive director, which makes ESOPs possible but adds director duties and filings (4.18). It is rarely worth it for an advisor.
  • Options in a foreign parent, if you have flipped (4.03). The advisor holds an overseas security, which for a resident individual is an overseas investment under FEMA. Check the ODI rules (4.19) before granting.

US. Grant NSOs under the company's equity plan, approved by the board, with a strike price at the current 409A value. For very early companies, restricted stock bought at a nominal price with an 83(b) election is common and tax-efficient. Advisors outside the US can receive NSOs too, but check local securities and tax rules in their country.

UK. EMI is the best option scheme, but it is only for employees working at least 25 hours a week (or 75% of their working time). Advisors get unapproved options, or growth shares that only participate in value above a hurdle. Agree a valuation with HMRC where possible so the tax position is settled.

Cash instead of equity. For a defined, heavy project (a regulatory submission, a design review), paying a day rate is often cleaner and cheaper in the long run than equity. Use equity for ongoing involvement and judgement. Use cash for deliverables.

Scripts

Asking someone to advise:

"We're stuck on [specific problem], and you're one of very few people who has solved it at scale. Would you be open to a couple of calls over the next six weeks to see if we work well together? If it's useful for both of us, we'd like to make it formal with a small equity grant."

Making the offer:

"We'd like to offer you [number] options, about [x]% of the company fully diluted, vesting monthly over two years after a three-month cliff. In return we'd hope for roughly [2–4] hours a month on [areas]. We use the FAST template with a few changes. I'll send it over; happy to walk through it."

When an advisor asks for 1% or more at pre-seed:

"I appreciate what you'd bring. For context, Carta's data puts the median pre-seed advisor grant at about a quarter of a percent, and 1% is top-decile. We can get closer to that if the role is bigger: could we agree a few specific things you'd take on, and size it to those?"

Ending an advisory relationship:

"Thank you for the help over the past months. Our needs have shifted toward [area], so we'd like to wind down the advisory agreement at the end of this month. Your vested options stay yours, and we'd love to keep you posted on how things go."

Common mistakes#

  1. Handshake promises of equity, which become disputes at the first priced round.
  2. No vesting, or full vesting up front.
  3. Using the FAST grid as the target rather than a ceiling. Market grants are about half the grid.
  4. Advisors as decoration: long lists of names on the deck with no real role.
  5. No IP assignment for technical advisors, who then turn out to be co-inventors.
  6. Ignoring the advisor's employer or university, whose policies may claim what the advisor creates or forbid the role.
  7. Full single-trigger acceleration left in by default.
  8. Granting ESOPs to non-employees in India, which the Companies Act does not allow.
  9. Giving percentages instead of share numbers, which creates ambiguity once the cap table changes.

10. Never reviewing: inactive advisors keep vesting for two years.

  • 2.12 Professor as co-founder, adviser or CSO
  • 4.03 Flipping to a Delaware holding company, and reverse-flipping back to India
  • 4.08 Setting up the cap table and choosing a tool
  • 4.09 Employment contracts, NDAs and invention assignment
  • 4.10 Contractor and consultant agreements
  • 4.19 FEMA, FDI and ODI rules for foreign money
  • 5.01 ESOP pool sizing
  • 5.04 Allocating equity by level

Sources#

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