When running a business, you can’t be expected to know everything. That’s why it can pay to use advisors. There are lots of circumstances when an expert can come in handy. Sometimes, you might want a lawyer to look through your business plan and make sure that everything is set up properly. Or you might need help solving a technical engineering issue. Unlike regular employees, these advisors are only needed for a limited period.
But before you hire any advisor, you must have the right legal framework. This is where a YCombinator advisor agreement comes in. Let’s take a closer look at what these documents are and how they can help protect your business.
The Basics Of A YCombinator Advisor Agreement
These agreements govern the relationship between your company and the advisor. By setting out the rules early you’ll be avoiding any potential misunderstandings later in the relationship. These documents are legally binding. This gives your business some protection if the advisor doesn’t hold up their end of the bargain.
Now that we know the purpose of a YC advisor agreement, let’s look at the elements that it should contain:
- Advisor expectations. This is where you lay out what you want your advisor to do. It’s best to be specific about their goals. By doing this, you can tell if your advisor has fulfilled their obligations.
- Who covers expenses. Being an advisor might require traveling to meetings or conventions. The agreement should specify who is responsible for these costs.
- Compensation. This section deals with how your advisor will be paid for their time. Most often, they will be given company stock. At other times, they will get cash. You’ll also need to specify when they will be paid.
- Intellectual property protections. This portion of the contract outlines who controls the ideas that the advisor generates. You might also want to include a non-compete clause. This stops the advisor from giving their services to a rival business for a certain period.
- How disputes will be resolved. You can’t always get along with your expert advisor. It’s important to outline what will happen if there is a conflict of opinion. Options to explore include mediation and arbitration.
A YCombinator advisor agreement is a good place to start negotiations. This is a basic template, filled out with standard legal language. From there, you can customize the document to better suit your needs. This approach is much faster and cheaper than getting an attorney to draft everything from scratch. Once the contract has been designed, you just need to get a lawyer to check it.
It should be noted that advisor agreements are slightly different from a founders agreement template YCombinator. A founders agreement is made between the creators of the company. It outlines the responsibilities of each party. Typically, this is made before the business is created.
Conclusion
Bringing advisors into your company is a great way to leverage expert knowledge. But it pays to have an agreement in place before you start working together. This will save you from a lot of hassles down the road. Plus, if you need to, you can enforce this document to protect your business.
