Why does Advisor Equity Grants matter?
Advisor equity is cheap to over-grant and expensive to claw back, so the sizing decision matters more than it looks like it should for a number that is usually a fraction of a percent. Grant too generously across too many advisors and the cap table accumulates dead weight that dilutes everyone else for guidance that, in practice, was a handful of calls. Grant nothing and a genuinely valuable advisor — someone who opens doors or catches mistakes a founder cannot see — has no reason to keep showing up once the novelty wears off.
What does Advisor Equity Grants look like in practice?
Suppose a company at seed stage grants an advisor 0.25% of the company, vesting monthly over two years, in exchange for a standing monthly call and warm introductions to potential customers. That is roughly in line with common early-stage advisor grids, which scale grant size down as the company matures and its equity becomes worth more. The same 0.25% granted to five different advisors for loosely defined help adds up to more dilution than most founders realize until they see it totaled on the cap table.
What are the common mistakes with Advisor Equity Grants?
- Granting equity without a vesting schedule, so an advisor who disengages after one conversation keeps the full grant.
- Using founder- or employee-sized grants for advisory relationships that involve a few hours a month.
- Adding advisors to the cap table faster than the company adds evidence that any of them are actually useful.
- Never revisiting inactive advisor relationships, leaving stale grants on the table indefinitely.
Related concepts
- Vesting and the CliffVesting is earning equity gradually over time by staying with the company; the cliff is the initial period — usually one year — during which none of it vests, so someone who leaves early walks away with nothing.
- Co-Founder Equity SplitHow ownership of the company is divided among the founding team at the outset — a decision made with the least information a company will ever have about who contributes what.
- Cap TableThe authoritative record of who owns what in a company — every founder, investor, and option holder, with share counts, security type, and percentage ownership.