Equity & Ownership

Advisory Shares

Understand advisory shares: small, vesting equity stakes given to advisors for guidance rather than cash or full-time work. They are worthwhile for advisors who genuinely add value, but should be kept proportionate, vested, documented, and cumulatively small.

  • Intermediate
  • 13 min total
  • 12 chapters

What decision this helps you make: Whether and how to grant advisory shares: proportionate to the value provided, vested and documented, and cumulatively small.

What this topic is

Advisory shares are small equity stakes given to advisors (experienced people providing guidance, expertise, connections, or credibility) in exchange for their help rather than cash or full-time work. The grant is typically a fraction of a percent to a low single-digit percentage.

Why it matters

A well-chosen advisor can add real value (doors, credibility, expertise) worth a small equity stake to secure and align. But the main risks are over-granting and dilution creep, so advisory shares should be proportionate, vested, documented, and cumulatively small.

Who should learn it

Founders granting advisor equity, and advisors receiving it.

What you will understand

  • Understand advisory shares as small equity for advisor guidance
  • See why they're small (part-time guidance, not full-time work)
  • Know they should vest and be documented
  • Keep them proportionate and cumulatively small

Prerequisites

Common misconception

"Give every helpful advisor a nice chunk of equity. Advice is valuable." Be careful. Advisory shares are small stakes (a fraction of a percent to a low single digit) because advisors give part-time guidance, not full-time work. Each stake is sized to the value and time they provide. The main risks are over-granting and dilution creep: many small grants that add up to a meaningful chunk of the cap table. Grant them proportionately, vest and document them, be selective, and keep the cumulative total small.