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Over what period of time do you vest Advisor Equity?

I am in the process of bringing on an advisor, and we are currently ironing out terms. I was wondering if Advisor equity vests at the same rate as other team members, or if it is supposed to be a shorter vesting term? Sure, you want the advisor on board for the long term, but you have to build in protections of some sort, right? You can't just give away a piece of your company, and then not get the results you were looking for.
Thanks for any advice on this!

4 Replies

Chris Carruth
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Chris Carruth Advisor
VP/Director. Strategy | Business Development | Operations | Product | Solutions
I have seen cases where the advisors vest over the same period as the sr. mgmt team, others where they vest sooner. I think it also depends on your relationship with them - if virtual strangers be more careful. However, if you know them and especially if you have worked with them before, then my personal feeling is you are less at risk and can be a bit more flexible.
Eleanor Carman
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Eleanor Carman Entrepreneur • Advisor
Incoming BLP Sales Associate at LinkedIn
Great question, Jordan. Here are a few links that might help you gather more information on advisor equity.
At FD, we recommend 2 years.
Brenton Webster
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Brenton Webster Entrepreneur
CEO & Founder at FastBar Technologies Inc
Check out the FAST template from the Founders Institute: http://fi.co/contents/fast#

It covers recommend advisor percentages at different stages of your business and also outlines duties of advisors at different levels. They recommend a 2 year vest with 3 month cliff, which is pretty standard.
Lonnie Sciambi
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Lonnie Sciambi Advisor
"The Entrepreneur's Yoda"- inspiring, guiding entrepreneurs to achieve their dreams - CEO Mentor/Advisor, Author/Speaker
For openers, you should keep it in line with whatever you've done with the management team, both in terms of vesting (if they are options) and pricing/valuation. Whatever you do, keep it simple. Often, entrepreneurs, especially in the early going, try to please everyone and end up with a capital structure that resembles a Fortune 500 company. if the team is some compensation in equity, you're already a value return for time model. Your advisor's rate might be a little higher, but his/he committed hours won't be that high. Hope this helps.
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