Fast Agreement
The FAST Agreement is used by tens of thousands of entrepreneurs and advisors per year to establish productive working relationships, trading advice and support for a standardized amount of equity.
The Founder / Advisor Standard Template ("FAST") was developed by the Founder Institute to help aspiring entrepreneurs in the startup launch programs that we operate worldwide set-up advisory boards and engage with the mentors that they interact with throughout the program. In 2011, the Founder Institute released the FAST Agreement to the public, and we have been making incremental updates on the Version 1 of the Agreement ever since. On August 1st, 2017, the Founder Institute has released Version 2, which includes a number of enhancements:
- The FAST Agreement can now be localized into any legal jurisdiction where corporate law supports the granting of options or restricted stock without having to hire a lawyer.
- The Advisor commitment levels have been simplified and standardized.
- The signing of the Agreement has been simplified.
- The enforceability of the Agreement has been improved.
The FAST Agreement removes unnecessary complexity, making it easy for founders and advisors to agree on responsibilities and equity with minimal administrative work.
Using the FAST Agreement, you can check a few boxes, sign the Agreement and start working. There is no longer the need for cumbersome negotiation, legal drafting and review.
The FAST Agreement
With just a signature and a checkbox on the FAST Agreement, entrepreneurs and advisors can agree in minutes on how to work together, on what to accomplish, and on the right amount of equity compensation.
New FAST versions are being refined based on feedback. If you have comments, please contact us to submit them.
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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. The FAST Agreement does include a three-month "cliff" on equity vesting, allowing for an unproductive advisory relationship to be terminated without having the burden of allocating any equity within the first three months.
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 Overview
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.
| Idea Stage | Startup Stage | Growth Stage | |
|---|---|---|---|
| Standard: Monthly Meetings | 0.25% | 0.20% | 0.15% |
| Expert: Add Contacts Projects | 1.00% | 0.80% | 0.60% |
Frequently Asked Questions
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The exercise price of the shares under the FAST agreement will be determined at the time of issuance and will be included in the applicable Stock Purchase Agreement.
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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.
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The FAST Agreement is free and can be modified as you need. Please check any modified FAST Agreement against the original template to ensure that you are not signing any unexpected terms.
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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.
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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.
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Typically the shares would be purchased upon an exit event, e.g. an acquisition, merger, IPO, etc. In some instances you may need to purchase the shares within a time period (e.g. 90 days) if your advisor engagement ends, this would be detailed in the Stock Purchase Agreement.
The Founder Institute is the world’s most proven network to turn ideas into fundable startups, and startups into global businesses. Since 2009, our structured accelerator programs have helped over 8,600 entrepreneurs raise over 1.9BN in funding. Based in Silicon Valley and with chapters across 100 countries, our mission is to empower communities of talented and motivated people to build impactful technology companies worldwide.
