2. Compensation. In return for the services provided by the consultant and other obligations, the entity compensates the advisor with equity funds as defined in Schedule A, subject to a blocking plan defined in Appendix A and the agreement to grant or issue equity to the advisor. The term “advisory board” is somewhat false, as consultants generally do not meet regularly as a group and do not have the legal and fiduciary responsibilities of a board of directors. If you are considering using new consultants, avoid a common mistake: the temptation to donate equity to add important names to an advisory board to impress investors and potential clients. “This big name is probably someone who`s very busy, hard-to-reach and not there when you need it,” Fryer says. Rust agrees. “The other side is that there`s a whole market of people who collect board chairs and don`t work much, but keep supplies,” he says. Sign agreements with startups that indicate their roles; The founder/consultants default model (“FAST”) was developed by the founding institute to assist future entrepreneurs in the start-up programs we implement and implement around the world and in contact with the mentors with whom they interact throughout the program. In 2011, the founding institute published the public FAST agreement, and we have since undergone gradual updates to version 1 of the agreement. On August 1, 2017, the founding institute released a preview version of Version 2, which contains a number of improvements: consultants are a valuable resource that can provide appropriate help at the right time for your start-up. But don`t forget that an advisory board is not meant to brag about rights.
It`s about finding dedicated allies with specific skills that can help you accomplish a clearly defined task. Finally, for startups in sectors that need in-depth expertise, the right advisor can be invaluable. “For a biotechnology company, it could really change a company to bring on board someone who is a doctor or researcher with solid knowledge,” says Ash Rust, managing partner at Sterling Road, a Bay Area venture capital firm that invests in and advises start-up startups. A consulting agreement should be reached between a company and its advisor. The agreement puts the expectation of the relationship as the work done on behalf of the advisor and compensation.