What is a Startup Advisor?

A startup advisor is an experienced operator or investor who helps your startup part-time, usually paid in a small slice of equity instead of cash.

How does an advisor work?

You agree on scope: what they help with, how often you meet, how long it runs. Pay is almost always equity, roughly 0.1 to 1 percent, vesting monthly over one or two years behind a short cliff. Most advisors give a few hours a month. A call, a warm intro, a fast answer when you are stuck.

Why do advisors matter?

They sell you pattern recognition you cannot afford to hire. A good advisor has already run the play you are about to attempt, so they cut months off your learning curve and open doors to customers and investors. A bad advisor costs equity, calendar time, and false confidence.

Where did advisors come from?

Outside counsel is as old as business. Startups standardized it in 2011, when the Founder Institute published the FAST agreement and tied advisor equity to two things: how deep the engagement goes and how early the company is.

How do you use advisors well?

Recruit against a named gap, not a famous name. Run a 30 day trial before you grant anything. Put scope, vesting, and the exit in writing. Keep total advisor equity near 1 percent of the cap table. End it when the meetings stop producing.

Bottom line: An advisor is cheap leverage when you scope the job, and expensive noise when you do not.

For more startup terminology, visit startupdefinitions.com.