Advisory equity (also called advisory shares) is how early-stage startups compensate their advisory board without spending cash. It is one of the most common equity arrangements outside of employee and investor equity.
What are advisory shares?
Advisory shares are typically issued as common stock options, not restricted stock, with a standard vesting schedule. The advisor receives the right to purchase shares at a predetermined strike price after they vest — which protects founders if the relationship does not work out.
Typical advisory equity grants
Grant sizes vary by stage and the advisor's expected contribution:
- Pre-seed / seed: 0.1%–0.5% of the company
- Series A: 0.05%–0.25%
- Later stages: 0.01%–0.1%
The standard vesting is 2 years with no cliff (monthly vesting from day one), reflecting the shorter-term, lower-commitment nature of advisory roles versus employee equity which typically uses a 4-year schedule with a 1-year cliff.
Advisory equity vs advisory shares
The terms are interchangeable. "Advisory equity" describes the overall compensation structure; "advisory shares" refers to the specific shares or options granted under that structure.
What advisors provide in exchange
- Functional expertise — a former CTO advising on technical architecture
- Network access — introductions to potential customers, partners, or investors
- Domain credibility — lending authority to the company in a specific industry
- Fundraising help — warm intros to investors at their tier
Common mistakes founders make
- Granting too much equity without defining deliverables
- Failing to use an advisor agreement (FAST Agreement from Founder Institute is the standard)
- Not including a repurchase right if the advisor stops engaging
- Giving advisor equity to investors who already have a financial stake