Bringing on an Advisor can materially improve how your company operates. Bringing on external advice can help you achieve so much more, so much faster, by leveraging the experience of others. However, as with any new relationship, it’s best for everyone if the nature of the relationship is formalized so that expectations are met. As part of our ongoing initiative to reduce the level of work and legal documentation that founders have to pay for and draft, we are posting this new document to help streamline this process.
Several weeks ago we posted some guidance on issuing the right number of shares/options to employees and advisors. As discussed in that post, sharing equity with employees and advisors is often used as a motivational tool and a way to develop a company’s relationship with that individual.
But before thinking about numbers of shares or options to issue an advisor, there are a number of points to hammer out. What is the advisor’s role? Will she be providing marketing insights or board-level guidance? How much time will she be expected to commit each month and for how long? What will she be paid? Establishing these points will help determine the right number of equity to issue, as well as make sure everyone is on the same page in terms of expectations and responsibilities.
Some guidance on numbers and a head start for US Startups
For US startups, the Founder Institute offers some guidance on numbers as well as a free template agreement to help get the formal framework for the relationship out of the way quickly and without the legal headaches. You can read their guidance and get the US template here.
And for the UK…
To complement the Founder Institute’s resource on this discussion, we’re launching the Advisor Agreement (download here in PDF). This free template agreement is UK-friendly and covers the standard big issues – appointment and termination, time commitment, roles and duties, fees, conflicts of interests and confidentiality. Of course as you discuss the arrangement, you may come across other points to include (exclude) or make other alterations.
Usage of this document
As with our other Seedsummit documents, the Advisor Agreement is meant to be a template on which to tailor the bespoke agreement that works best for you, or to use it as is.
Yet another big thank you to the folks at Brown Rudnick for drafting this document.
Brown Rudnick LLP is an international law firm with offices in the United States and Europe working with emerging technology businesses and investors.
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- How do you issue the right number of shares/options to an employee or an advisor?
- Creating a Tech Start-up: Forty Point Checklist
Image on post credit: DDR Monument, vanVrede on Flickr
