As part of the consultant`s agreement, it should be noted that the advisor has no right to the company`s IP address; he/she only has access to it if it is necessary for the implementation of the necessary consulting services. The FAST agreement recommends standard capital grants for an individual advisor. It is not uncommon for a technology startup to award a 5% capital pool to a group of strategic advisors or an advisory committee. The difference between ASR and NSOs is largely a legal distinction. RSAs are shares that have been purchased in advance, and NSOs are stock options that are generally awarded later. 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.
Non-disclosure of confidential information should also be included in the consultant`s agreement. As a result, not all confidential information about the company is shared with third parties by the consultant. It should also be noted that by respecting this part of the agreement, it is ready to preserve the company`s secrets as best as possible. The return of certain company documents in the event of termination must also be respected. Consultants generally receive shares of common shares, as do employees who are subject to the course of the employment relationship. As a general rule, they receive either: some companies will sometimes even create an advisory board; However, this is not considered a legal body. This is not necessary and purely optional. It is designed to improve the credibility and social evidence of the start-up. It is not mandatory to indicate this in the consultant agreement.
Some agreements have a three-month pitfall, giving the parties time to determine whether the relationship brings added value and develops. That`s why we asked the team of Wilson Sonsini, one of the world`s leading law firms, to establish a model agreement for founders and business consultants that can serve as a model. You can download the model for free below: Many proposals regarding the amount of equity to allocate individual advisors come from anecdotal experience. But at Carta, we have data that gives a real insight into what`s really going on. So we looked at consulting actions that were issued in 2019 for companies that raised less than $2 million. Here are the most common arrangements we`ve seen: Here`s a density plot of NSO and RSA consultants deals for companies on Carta in 2019, which have raised less than $2 million. Axis X represents the fully diluted percentage of a business. The lines have been standardized, so that it appears that option agreements have been established in the areas described above, but they are not common.
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.