Use This Data to Push Back on 1 Percent Advisor Equity Requests

Founders - use this post to push back on advisors who ask for 1% of your pre-seed startup.

Advisors, I'm sorry. Some of you really are worth 1% or more to these early founders. But you gotta make the case as to why you're in the top decile of startup advisors.

Republishing this data after a great session with accelerator founders last night, many of whom were not from the Bay Area and were candidly getting sticker shock at the advisor requests from locals who "know this market".

Data in the graphic reflects the full option grant % given to advisors by stage. Split into low (25th pct), medium (50th pct), high (75th pct) and super high (90th pct).

And please ensure these advisors have a vesting schedule! Typically 2-years with a short cliff or you can set specific performance milestones (eg Advisor A gets 0.1% equity after they complete the following tasks for the business).

𝗢𝘁𝗵𝗲𝗿 𝗔𝗱𝘃𝗶𝘀𝗼𝗿 𝗙𝗶𝗴𝘂𝗿𝗲𝘀

• The median pre-priced round startup on Carta has between 1-2 advisors.

• There is a small but growing cohort of startups that have many more advisors (in the 10-15 range). Those folks are getting much smaller slices of equity - not sure if this is a new strategy or just a quirk of the moment.

• We see many people start out as advisors and then become strategic investors (typically with a smaller check) into the same company. That's a great strategy to bolster the value of said advisors as a signal to potential VCs.

• The most common template for advisor equity docs and agreements is the FAST (Founder/Advisor Standard Template). I think it's a great and highly recommend it to early founders.

• The data below covers startups of all kinds. Those building in life sciences and technical hardware do tend to see larger advisor equity grants at the early stages.

#startups #advisors #advisorequity #preseed

Subscribe at the link in graphic to receive a carrier pigeon stuffed with Carta data every week in your email inbox.