With a single signature and a box to coerc on the FAST agreement, entrepreneurs and consultants can agree in a few minutes on how to work together, what to accomplish and the correct level of equity compensation. Finally, for startups in sectors that need in-depth expertise, the right advisor can be invaluable. “For a biotechnology company, it could really change a company to bring on board someone who is a doctor or researcher with solid knowledge,” says Ash Rust, managing partner at Sterling Road, a Bay Area venture capital firm that invests in and advises start-up startups. If you are considering using new consultants, avoid a common mistake: the temptation to donate equity to add important names to an advisory board to impress investors and potential clients. “This big name is probably someone who`s very busy, hard-to-reach and not there when you need it,” Fryer says. Rust agrees. “The other side is that there`s a whole market of people who collect board chairs and don`t work much, but keep supplies,” he says. At the end of the day, it`s about how to use the counsellor. You have to tell them what you need and what you expect. Find someone who can be a resonance that can help you turn your business around. Founders before giving equity to an advisor, decide if it`s worth it.
If you generate income, can you afford to pay for it instead? If you can`t afford it, a capital agreement could be the beginning of a useful partnership. First-class companies can check Carta Launch if they need help issuing equity, whether they are consultants, investors or collaborators. As the world`s largest training and start-up program for entrepreneurs, the founding institution is trying to solve problems for entrepreneurs who threaten innovation. Once you have identified an advisor, you will need a detailed agreement containing a carefully crafted capital compensation agreement. Whether your lawyer is designing this agreement or using a template, the document must contain: There are times when an advisor proves so valuable to a start-up that the founders want them to have employees. Schmorak says that at least one of the company`s former advisors is “now an important member of our team.” HK Startups For Hong Kong-based startups, we awarded the Advisor agreement to a version tailored to Hong Kong-based startups. See the link on the right to access the document. Why: If a consultant relationship does not go well, you can avoid the potential conflict of letting it go simply by letting the agreement expire. In this way, you can offer this capital allocation to another advisor who could train better.
But distributing equity, even to close consultants, is something that founders must do conscientiously. Some agreements have a three-month pitfall, giving the parties time to determine whether the relationship brings added value and develops. What is the relationship between a board of directors (BOD) and your advisors? nothing. Most importantly, your board members are responsible for the management of the company and are legally responsible for its execution, while your advisors are not responsible for anything and are not legally responsible for anything. Their directors have a lot of commitment and often meet several times a year. Your advisors are less dedicated and often hired via email and Skype.