Before You Give Away 1%, Read This

I’ve seen a founder give 1% equity to an advisor... for “being helpful on a Zoom call.”

It ended up being a $1M thank-you card.

And no, that advisor didn’t help them raise.

Didn’t join a single sales call.

Didn’t even intro them to an investor.

Just some vibes & hype that he really “got the product-market-founder fit.”

Unfortunately, most founders treat advisor equity like marketing budget:

They throw it around and hope something sticks.

But here’s the kicker:

Startup equity is not Monopoly money.

It’s your future.

Your cofounder’s livelihood.

Your investor’s upside.

And that 1-3% you’re handing out like Tic Tacs? It adds up.

Why Founders Keep Screwing This Up

Let’s call it like it is:

• You’re desperate for help. (And hey, that’s okay.)
• You think a “big name” will impress investors.
• You don’t know how to value advice, so you default to equity.
• You overestimate what they’ll actually do.
• You didn’t define success, so you can’t measure ROI.

And honestly?

Most advisors are better at getting equity than earning it.

But here’s the good news:

You can fix this.

You can work with legit advisors without blowing up your cap table.

You can structure it so they actually do the work.

And yes—you can walk away from bad ones before it’s too late.

Let’s break it down.

Step 1: Don't Offer Equity Until You’re Clear on the “Why”

You’re early-stage. You’ve got limited cash.

Equity feels like the easiest way to “pay” for advice.

Here’s the trap:

You give it before you know what you want in return.

Instead:

• Define the goal first: What exactly do you want help with?

         Is it intros? Strategy? Storytelling? Fundraising prep?

• Set a time limit: How long will this person be involved?

          You don’t need someone hanging around forever.

• Ask yourself: Would I pay them in cash if I had it?

          If the answer is no... then why are you offering equity?

Think of equity as the most expensive currency in your business.

Treat it like buying race fuel for your car’s engine, not like a college kid with Dad’s debit card at happy hour.

Step 2: No Vesting, No Equity

Founders love giving equity to advisors.

But forget the most important part: vesting.

Here’s a general rule:

• Use a 2-year vesting schedule with a short 3–6 month cliff
• Or set clear performance milestones

          (e.g., Advisor gets 0.1% after completing key tasks like intro’ing 5 investors, reviewing the pitch, etc.)

This keeps things clean, fair, and earned.

And if they flinch at vesting?

You’ve got your answer: they’re not here to help—you’re just their lottery ticket.

Hard no.

Step 3: Use the FAST Agreement

Use the FAST Agreement from Founder Institute.

It’s clean. Standardized. And protects both sides.

Here’s how it works:

• Equity is based on stage and engagement level
• Equity vests over time (not up front)
• Everyone knows what’s expected

Typical equity ranges:

• Idea stage: 0.2%–1.5%
• Pre-seed: 0.1%–1.0%
• Seed: 0.05%–0.4%

That’s it. No more guesswork. No more awkward negotiations.

Step 4: Audit Your Cap Table (and Your Guilt)

Sometimes founders give away equity out of emotional obligation.

• “They helped early on.”
• “They introduced me to that investor, even though it didn’t work out.”
• “They believed in me.”

Cool.

Write them a thank-you card. Not a stock certificate.

Startups don’t fail because of bad advisors.

They fail because of sh*tty cap tables that leave no room for key hires, real investors, or even co-founders.

Do this today:

• List out every advisor getting awarded equity.
• Write down what they’ve actually done in the last 90 days.
• Ask: Would I still offer them equity if I were doing it today?

If the answer is no...

You’ve got cleanup to do.

(And yes, you can renegotiate / buyback. Founders do it all the time. Frame it as aligning incentives.)

Here’s the bottom line:

Your cap table isn’t a loyalty card.

It’s your most valuable weapon.

Don’t give up equity unless you’re getting measurable value in return.

Set expectations.

Write it down.

Treat advisor equity like a business contract—because it is.

Every advisor should know exactly what they’re responsible for, when, and how it ties to their equity.

Your future self (and lead investor) will thank you.

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