Building an Advisory Board
Assemble an advisory board that fills your knowledge gaps and opens doors to customers, talent, and capital. Learn who to recruit, how to structure advisory relationships, and what compensation norms look like at each stage.
What You'll Learn
- ✓Identify the specific gaps an advisory board should fill for your startup
- ✓Recruit advisors who bring domain expertise, networks, and credibility
- ✓Structure advisory agreements with appropriate equity compensation
- ✓Run productive advisory meetings that generate actionable insights
Why Advisors Matter
Advisors fill gaps that your founding team cannot cover, from industry expertise to investor connections. A well-known advisor adds instant credibility when fundraising or selling to enterprise customers. The best advisory relationships are specific and mutually beneficial, not just a name on your website.
Who to Recruit
Recruit advisors who have direct experience in your industry, access to your target customers, or fundraising networks you need. Look for people who have built companies at the stage you are entering next, not the stage you are at now. Two to four advisors with distinct skill sets is more valuable than a large board of generalists.
Compensation and Structure
Standard advisor equity ranges from 0.1% to 1% depending on involvement level, vesting over one to two years. Formalize the relationship with an advisory agreement that specifies time commitment, typically two to five hours per month. Use a standard FAST agreement to keep things simple and fair.
Key Takeaways
- ★Standard advisor equity is 0.25% to 0.5% for a few hours per month, vesting over two years
- ★The FAST agreement is the most widely used template for advisor compensation
- ★Startups with advisory boards raise 3x more capital on average than those without
- ★The best advisors are one to two stages ahead of where your company is today
- ★Advisory relationships should be reviewed annually and sunsetted if they are not producing value
Check Your Understanding
How much equity should you offer an advisor?
The standard range is 0.1% to 1% depending on their involvement level and the value they bring. A strategic advisor making key introductions might receive 0.5% to 1%, while a subject-matter expert consulted monthly might receive 0.1% to 0.25%. Always vest advisor equity over one to two years.
What is a FAST agreement?
The Founder Advisor Standard Template is a one-page document that standardizes advisory relationships. It defines the advisor's role, time commitment, equity grant, and vesting schedule. It was created to eliminate the overhead of negotiating custom advisory agreements.
Frequently Asked Questions
Everything you need to know about BusinessIQ
Two to four advisors with complementary skills is ideal for most early-stage startups. More than five advisors becomes difficult to manage and often means none of them are deeply engaged. Quality of engagement matters far more than quantity.
No. Advisors provide guidance but have no fiduciary duty or legal authority. A board of directors has governance responsibilities and voting power over major decisions. Most startups need both, though a formal board of directors typically comes after a priced funding round.
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