Advisory stakes based on involvement levels
Advisor equity is priced by the value and time commitment of the advice, not by seniority alone. A well-connected advisor who makes a handful of warm introductions might warrant 0.1% to 0.25%, while an advisor who commits several hours a month, joins calls regularly, and takes on a semi-formal role might warrant 0.5% to 1%, a range that overlaps with first employee equity grants.
| Advisor involvement | Typical equity | Typical vesting |
|---|---|---|
| Occasional introductions and light input | 0.1% to 0.25% | 1 year |
| Regular monthly input, some hands-on help | 0.25% to 0.5% | 1 to 2 years |
| Deep involvement, near part-time commitment | 0.5% to 1% | 2 years |
Instrument selection and vesting for advisors
Most advisor equity is granted as stock options rather than shares outright, since options let the company avoid an upfront cash outlay from the advisor and align with standard vesting practice. The grant should be tied to a signed advisor agreement setting out expected time commitment, confidentiality, and IP assignment for any work product.
- Written advisor agreement with clear scope and expectations
- Options granted under the company's existing option scheme (EMI in the UK where eligible, or a standard unapproved or local equivalent elsewhere)
- Vesting tied to continued advisory relationship, with acceleration on a sale sometimes included
- A no-cliff or short-cliff structure, since advisors are not full-time employees
Advisory equity compliance across European borders
In the UK, advisors are not usually eligible for EMI options unless they are also directors or employees with the required weekly time commitment, so many UK companies use unapproved options for pure advisors. In other European countries, advisor grants often use whatever standard employee option plan the company has, adapted for a non-employee, non-resident, or self-employed status, and local rules on options for non-employees vary by country, which affects how the option pool is sized.
Questions on paying advisors in equity
- Should advisors get shares or options?
- Options are more common because they avoid requiring the advisor to pay for shares upfront and fit naturally into a vesting structure.
- Do advisors need a formal agreement?
- Yes. A written agreement protects both sides by defining scope, time commitment, and what happens if the relationship ends.
- Can advisor equity be taken back if they stop contributing?
- Only the unvested portion, assuming the grant includes standard vesting and a cessation-of-service clause.
General information for founders, not legal or tax advice. Thresholds and rates change, so confirm the current position with an adviser in the relevant country before granting.