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Advisors can be great for startups. You can leverage their experience to get personalized tips. This can help you get around technical roadblocks. Or they can use their network to connect you with important industry leaders.
There’s just one problem. Creating an advisor agreement can be tough. Traditionally, this meant hiring a lawyer. This added an additional expense and slowed down the process. But there is now a better option. You can use a FAST advisor agreement. Let’s break down how this new approach makes it easier than ever to secure an advisor.
How FAST Advisor Agreements Work
A FAST advisor agreement is a simple contract template. Once you find an advisor, you’ll need to personalize it to suit your company. This is fairly simple. Usually, you just need to tick a few boxes and add some specifics. Some of the details to include are:
- What you expect from the advisor
- How the advisor will be paid. Most of the time, they won’t be given money. Rather, they will be paid in shares. This means that they will be classified as an independent contractor, rather than an employee.
- Vesting period for the shares
- Number of shares the advisor is going to receive
- How the advisor will receive shares
- How much notice the advisor needs to give before ending the relationship
As you can imagine, parts of this agreement can require negotiation. One of the biggest hold-ups is trying to decide how much equity to give the advisor. Usually, this decision is based on two factors. First, you need to decide what stage of the process your startup is in. If you are relatively new, you’ll need a lot of help to get up and running. This usually necessitates a higher equity arrangement.
Next, you want to know how much support the advisor will provide. Some will only attend quarterly meetings. While others will visit fortnightly. Advisors that take a more active role will get more equity, to reward their efforts. It’s also important to consider the vesting period. Longer vesting periods require more equity.
Benefits Of A FAST Advisor Template
There are plenty of reasons why you might want to use a FAST advisor agreement. One of the biggest is that it saves you time and money. There’s no need to turn to lawyers. These documents can be drafted and signed within a few hours. Even better, these agreements are only a few pages long.
While they might be easy to draft, they are still legally enforceable. In 2017, a new version of the FAST agreement was released. This meant it could be customized to suit the laws in your local jurisdiction.
Once everything has been finalized, it’s easy for you to sign the contract. All an advisor needs to do is check a box and add their signature. After this, the document becomes legally enforceable. This speedy signature process is perfect for in-demand advisors. They have dozens of startups knocking at their door. Being able to sign them up seamlessly will give you the best chance of landing their help.
The Process Of Securing An Expert Advisor
A FAST advisor agreement is only helpful if you can find an expert who’s willing to help your startup. This can be tougher than you think. Just because someone is an expert doesn’t mean they are a good fit for your company. Thankfully, finding an advisor probably isn’t as difficult as you think.
It’s a good idea to start by making a list of potential local advisors. Ideally, there should be 10 to 15 names on the list. You can try using a site like LinkedIn to find suitable advisors. You can also connect with other businesses in the same niche. They might be willing to point you toward helpful advisors. Industry events can also be a great place to find helpful experts.
Once you have a list of names, contact the advisors. If they are interested in working together, organize a meeting. This is a chance to get to know them as a person. Generally, you should get to know a potential advisor for at least eight hours before you offer equity. This should give you confidence that their leadership style fits with your organization. Plus, it gives the advisor a chance to get to know your startup.
If they are a good match, you can ask if they are interested in taking an advisory role. If they are keen, you can start the contract negotiations. Before you know it, they’ll have signed the contract. From there, the advisor can begin offering their services.
Conclusion
Learning from the advice of experts will help your startup get ahead. Despite this, many founders might avoid this step. They fear that creating the advisor agreements will take too long. These days, the complete opposite is true. Thanks to a FAST advisor agreement it’s never been easier to land an expert advisor.