October 14, 2026
Most early-stage startup advisors are paid in equity, not cash. A typical advisor grant is between 0.25% and 1% of the company’s fully diluted shares, vesting monthly over two years. Size it by how much the advisor will actually do, state it as a number of shares, and put it in a written advisor agreement and an equity award approved by the board.
Key takeaways
A good advisor gives you a few hours a month of specific help: introductions to customers, partners or investors, help recruiting, fundraising preparation, or deep expertise in your industry or technology. The best advisor relationships start with a clear ask. Before you talk about equity, write down what you want from this person, how often you’ll meet, and what a successful year looks like.
Most advisors come from the founders’ own networks or warm referrals. Look for someone with directly relevant experience who will actually show up. A few active advisors are worth far more than a long list of names on a pitch deck, which investors tend to discount.
Not at first. Informal advice over coffee doesn’t need paperwork. Sign an advisor agreement the moment you promise equity or share confidential information such as your roadmap, financials or code. A verbal equity promise to an advisor is one of the most common cap table disputes in diligence. See Promising Equity vs Issuing Equity.
Most advisors receive between 0.25% and 1% of the company’s fully diluted shares. Where an advisor falls in that range depends on how much time they’ll commit, how specific and valuable their help is, and how early the company is. Grants shrink as the company matures, because each share is worth more. Keep grants consistent across advisors who join at the same stage, because advisors talk to each other and will compare notes.
Always convert the percentage into a share count. With Westaway’s default setup of 10,000,000 authorized shares and a 1,000,000-share option pool, a company with 9,000,000 fully diluted shares that grants an advisor 0.25% would grant 22,500 shares. See Exact Share Numbers.
At Westaway, advisors follow the same pattern as early employees: restricted stock early, NSOs later.
Before the company’s first 409A valuation, grant restricted stock from the equity plan at fair market value, which is usually close to par at that stage. The advisor should file an 83(b) election within 30 days of the date the shares are issued, a deadline that can’t be extended. See 83(b) Election.
After the first 409A, grant non-qualified stock options (NSOs) at the 409A price. Advisors aren’t employees, so they can’t receive ISOs. See NSO vs ISO and 409A Valuation.
Either way, the grant comes out of the option pool and must be approved by the board. Have your advisor talk to their own tax advisor about how the grant will be taxed.
The most common schedule is two years of monthly vesting with no cliff. Two years usually fits because most advisors are most useful at one stage of the company, and a longer schedule can leave you ending the relationship just to stop vesting. Some companies add a three- or six-month cliff so both sides can see whether the relationship works before any equity vests. If the advisor stops advising, vesting stops, and the company can repurchase unvested restricted stock or the unvested options are cancelled.
Advisor grants often include single-trigger acceleration, meaning all unvested equity vests if the company is acquired, because a buyer rarely keeps the advisors on. See Single vs Double Trigger Acceleration and Vesting Schedule.
Vested restricted stock stays with the advisor, and the company can buy back any unvested shares at the price the advisor paid. Options work differently. Most plans give a former advisor three months to exercise vested options, and after that the options expire. Many advisors don’t know this until the deadline has passed. Because advisors hold NSOs, the three-month window isn’t required for tax purposes, so the board can give an advisor longer, up to the end of the option’s original term, either in the original grant or when the relationship ends. Whichever you choose, send the advisor a short note confirming the date the relationship ended and the exercise deadline. It avoids an unpleasant surprise for someone who helped you, and it gives you a record if anyone later disputes when the advisor stopped advising.
Early-stage advisors are generally paid only in equity. Cash makes sense for well-funded companies buying short, specific projects, or for advisors who would rather not take equity risk. In that case the relationship often looks more like consulting, and a consulting agreement may fit better.
Some advisors earn a success fee, such as a cash payment when an introduction leads to a distribution deal. That’s fine for customer and partner introductions. Be careful with fees tied to investor introductions: paying someone based on money raised can implicate broker-dealer rules, and an unregistered finder can create problems for the round.
Advisor equity is for guidance and introductions, a few hours a month. If the person will spend real time each week doing the work, such as building product, running sales or managing a team, they’re not an advisor. They’re a contractor, an employee or a co-founder, and they should be documented and compensated that way. Calling a hands-on contributor an advisor creates both classification risk and IP ownership gaps. See Should My Startup Hire Someone As an Employee or a Contractor? and Founder Equity.
There are two documents. The advisor agreement sets the relationship. The equity award (a restricted stock purchase agreement or a stock option grant) issues the equity. The advisor agreement should cover:
Leave non-competes out. They’re unusual for advisors and hard to enforce, and some states, including California, ban them for contractors. A conflict-disclosure clause works better. See Non-Compete Clauses.
Many startups use the FAST agreement. We don’t particularly like it, because in our experience it creates confusion and unnecessary debate about equity. Still, it’s better than having no agreement. For the agreement terms in more detail, see Startup Advisor Agreement.
For related reading, see Startup Equity Compensation, Restricted Stock and Startup Board Member Compensation. If you’d like help with an advisor agreement and grant, see our Advisor Agreement service or contact us.
