Welcome everyone to another edition of my Global Tech Law Newsletter. I wanted to give a plug for a template we at Parkwyn Legal are a big proponent of for startups out there looking to engage advisors. Its called the FAST (Founder/Advisor Standard Template) and is available here: https://fi.co/fast

Its something I share with clients often, even if not to use the actual template but to wrap their head around how much equity they should be giving people who are helping them but not on a full-time basis. The most valuable part of the template is here, discussing equity amounts based on contribution and development stage of company:

Dividing the startup into different stages of development and how much contribution from their level of time, skill, and network an advisor adds to it creates a great framework to come to a fair arrangement, lock in that advisor to a real and more measurable contribution, and most importantly not overpay that advisor with free equity.

Left otherwise to their own devices, I’ve seen many founders tending to be too generous with equity promises, and signing up an advisor only for the company either to not ultimately know how to best use that advisor or for that advisor to be engaged with many companies and not really consistently available and proactive to help the startup after the initial honeymoon stage.

Again, the beauty of the FAST is that it is (as the name implies) (1) simple, (2) transparent, and (3) measurable.

Because in the beginning, you as a startup may want advisors for multiple reasons. Augmenting the team from a skills perspective where you can’t afford a FT hire (like having a tech, finance, or legal person as an advisor). Or for bringing on an advisor whose credentials alone act as a major endorsement for the company’s brand to both clients, but especially investors. As well as advisors who should lead to more connections that turn into customers and investors.

The standard template definitely still needs a bit of tweaking to build out transfer and shareholder restrictions as well as vesting provisions, but it does get companies most of the way there towards having a good vehicle to engage with advisors on equity and KPIs.

*This blog may be considered attorney advertising. It is for informational purposes only and does not constitute legal advice.