The Founder Advisor Standard Template
The Founder Institute encourages collaboration between entrepreneurs and other domain experts to build meaningful and enduring technology companies. In this effort, we have released the Founder Advisor Standard Template version 0.75 (“FAST”).
FAST allows any mentor, any advisor or any domain expert to quickly engage with and assist a fast growing technology company at any stage using fair terms for preset equity compensation. Simply check the level of engagement, sign the agreement, and start the relationship. There is no longer the need for cumbersome negotiation, legal drafting and review.
Engaging an Advisor
Entrepreneurs should engage with advisors carefully. Just because someone has a good name or has domain expertise does not mean that they are a good advisor or that there is the necessary level of good chemistry. The Founder Institute recommends that an entrepreneur work with a potential advisor for at least one month and spend at least 8 hours together before discussing the FAST agreement.
A classic approach for an entrepreneur to engage an advisor might follow the following outline.
- Research: The entrepreneur identifies between 10 and 15 target advisors that could help their business grow exponentially.
- Contact: Using Linkedin and Crunchbase, the entrepreneur identifies people that are known in common and secures an introduction.
- Meeting: The entrepreneur sends a five sentence introduction and requests a call, coffee or lunch.
- Request: If the chemistry is good with the advisor, the entrepreneur makes a small request of the advisor to test out the working relationship.
- Opportunity: If the request leads to a successful relationship dynamic, the entrepreneur presents an opportunity for the advisor to engage more formally with the business without discussing compensation.
- FAST: If the advisor agrees to engage, the entrepreneur sends the advisor the FAST agreement.
The FAST Agreement
With just a signature and a checkbox on the FAST agreement, entrepreneurs and advisors can now agree in minutes on how to work together, on what to accomplish, and on the right amount of equity compensation. There are three levels of company maturity that influence the equity compensation: idea, startup, or growth. There are also three levels of engagement for an advisor that also influence the compensation: standard, strategic, or expert. So, for example, if an advisor provides an early-stage startup with an expert level of help by meeting with the team monthly, recruiting some talent, and taking a customer call, then that advisor will earn 1% of the company in the form of restricted stock or options vesting over a two year time period; while a similar level of engagement for a growth stage company is compensated with just 0.6%. The FAST equity compensation framework is outlined below, and the full agreement explaining everything follows.
|Standard: Monthly Meetings
|Strategic: Add Recruiting
|Expert: Add Contacts & Projects
FAST version 26 is being refined based on feedback. If you have comments, please Contact form linked to at the bottom of this page to submit them.
Why should I use the FAST agreement?
The FAST agreement is designed to save time and money negotiating advisor relationships. There is just one page to fill out, and no legal assistance is necessary.
Can I modify the FAST agreement?
The FAST agreement is free and can be modified as you need.
Why compensate advisors with equity only?
The advisors that the FAST agreement targets are founders and high-level executives for strategic advice through advisory board roles, and these advisors are normally compensated with equity. The FAST agreement is not designed for traditional project consulting and "work for hire" relationships.
How much equity should I allocate to advisors?
The FAST Agreement recommends standard equity grants for an individual advisor. It is not uncommon for a technology startup to have a 5% pool of equity allocated to a group of strategic advisors or an advisory board.
What about localizing FAST to other countries?
The goal is to bring FAST to the four continents and all of the countries where the Founder Institute operates by the beginning of 2014. Want to help localize FAST? Please Contact form linked to at the bottom of this page to submit them.