Some startups may want to hire consultants to face different challenges. For example, an electric scooter company trying to break up in a new city may need an expert who knows how to navigate through regulatory roadblocks in its target market. Or a medical device manufacturer could benefit from a consultant who has links to leading academic institutions and government regulators. But before you think about the number of stocks or options to issue an advisor, there are a number of points to hammer. What is the councillor`s role? Will it give marketing insights or instructions at the board level? How long is it expected of her each month and how long? What does she pay? Defining these points will help determine the right amount of justice that needs to be spent and that everyone is on the same side in terms of expectations and responsibilities. Contractors should work carefully with consultants. Just because someone has a good name or domain expertise doesn`t mean they`re a good advisor or there`s the right level of chemistry. The founding institute recommends that a contractor work with a potential consultant for at least one month and spend at least 8 hours together before discussing the FAST agreement. The FAST agreement includes a three-month “stumbling block” on share participation, which allows an unproductive advisory relationship to end without having the weight of the capital allocation in the first three months. 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.
One of the most important elements of any advisory agreement – and the other that will have an impact on the future of your business – is the compensation component. This can be difficult because you essentially attribute part of your startup to a consultant who has yet to prove its worth. “You can`t always tell who has enough time and won`t be a flake and will work for the company in exchange for the potential equity they will receive,” Szymanski says. 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. Another thing: the needs of startups can change quickly, so don`t hesitate to replace consultants when priorities change. In fact, you can review your advisory board every six months to determine if a member is no longer needed.
“As a founder, it`s easy to get involved in this idea of your loyalty to your advisors,” she says. “But if you have to drive someone, you just have to do it.” If you hire top-notch people, they might even help with the process, like the best known advisors when resigning. Consultants who aspire to the FAST agreement are founders and senior executives for strategic advice through advisory roles, and these consultants are generally compensated in equity. The FAST agreement is not designed for traditional project council and work-rental relationships. 13.2. Exclusive agreement. This agreement, including exhibitions, constitutes the exclusive consent of the parties and replaces all oral proceedings and prior writings relating to the purpose of this agreement. Once you have identified an advisor, you will need a detailed agreement containing a carefully crafted capital compensation agreement.