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How much equity should I grant to an advisor?

What you must do is draw up an advisor agreement (these are freely downloadable on the web) so that there is a binding agreement to the time and duties they will commit to.

The best advisors in an investor’s eyes are the ones who actually invest money into your startup, otherwise they are simply vanity plays.

Make sure that the equity you grant (usually between 0.5% to 2%) is reverse vested. Time and again we see advisors who have taken advantage of naive entrepreneurs and managed to get up to 20% fully vested up front.

When this happens, an investor who is putting in hard cash will likely not invest or it means an awkward conversation down the road and redrafting the cap table.

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