Advisory Shares Explained: How Much Equity Advisors Get

Advisory shares are equity, usually stock options or restricted common stock, that a startup grants to an outside advisor in exchange for guidance, introductions, or expertise instead of cash. Grants are small: according to Carta's data on 2025 pre-seed grants, the median advisor received 0.24 percent of fully diluted shares, and 64 percent received less than 0.3 percent.

Advisor grants typically vest monthly over one to two years. They come out of the same equity pool that funds employee hires, which is why investors look at them closely.

Definition: Advisory shares are grants of common stock or non-qualified stock options to non-employee advisors as compensation for services, typically 0.1 to 1 percent of the company fully diluted, vesting over 12 to 24 months under a written advisor agreement.

Illustrative example: A pre-seed company with 10,000,000 fully diluted shares grants a go-to-market advisor 25,000 NSOs (0.25 percent) at a $0.05 strike, vesting monthly over 24 months with a three-month cliff. After 12 months the advisor has vested 12,500 options; if the company later sells at $4.00 per common share, those are worth about $49,000 before taxes. If the advisor disappears after month five, vesting stops and the unvested options return to the pool.

That's the point of vesting: you pay for help as it arrives, not for a name on a slide.

What advisory shares are, and what they aren't

"Advisory shares" isn't a special class of stock; the term describes why the grant was made. A startup issues one of two instruments:

• Non-qualified stock options (NSOs). The usual form once a company has a 409A valuation. Advisors are not employees, so, as Carta's advisory shares guide notes, they receive NSOs rather than incentive stock options.
• Restricted stock. Actual shares issued up front, subject to repurchase of unvested shares. Carta describes this as popular for very early-stage companies, often before the first funding round, when common stock is worth very little and an 83(b) election costs little in tax.

Either way, the grant dilutes everyone on the cap table exactly as an employee grant does.

How much equity advisors typically get

The FAST agreement. The Founder Institute's Founder/Advisor Standard Template (FAST), Version 3 updated July 2026, publishes this grid for restricted stock or options vesting over two years, with a three-month cliff:

The FAST page describes a standard advisor as one who joins monthly meetings and an expert advisor as one who adds contacts and projects on top of those meetings. The published grid shows only these two rows.

Actual market data. Real grants run below the template. Carta reported a 2025 median pre-seed advisor grant of 0.24 percent, with only about 1 in 10 advisors reaching 1 percent. Carta's advisory shares guide puts first-half 2024 medians at 0.21 percent at pre-seed, 0.12 percent at seed, and 0.05 percent at Series A. Cooley GO's guidance for a 24-month option grant is 0.15 to 0.75 percent of fully diluted stock, depending on how active and critical the advisor is and how mature the company is.

As a rule of thumb, the earlier the company and the more hands-on the advisor, the larger the grant. One percent tends to be the ceiling, not the norm.

Vesting, cliffs, and acceleration for advisor equity

Employee grants typically vest over four years with a one-year cliff. Advisor grants usually vest monthly over 12 to 24 months: Carta and Cooley GO both describe monthly vesting with no cliff, while the FAST agreement adds a three-month cliff.

The shorter schedule reflects that an advisor's usefulness tends to be front-loaded. Cooley GO makes the practical point that most advisors seem to have a shelf life of less than two years: the person who helped land your first ten customers rarely helps scale a 50-person sales team.

Three terms to watch:

• A cliff of about three months, which works as a trial period.
• A termination clause that lets the company end the relationship at any time, with vesting stopping that day.
• Acceleration on an acquisition. Cooley GO considers acceleration reasonable for an advisor who will add real value. Investors often check it anyway, because full vesting for a lightly engaged advisor on a sale can mean value leaving the cap table when it matters most.

We'd put everything in writing: scope, confidentiality, IP assignment and vesting. A handshake grant is a common cleanup item in a seed due diligence checklist, and it's cheaper to paper it now than during a round.

How investors evaluate advisory shares

An investor reviewing a cap table usually asks one question about advisors: did the equity buy something the company couldn't otherwise get? Here's the short checklist we'd run:

• Total advisor allocation. With typical grants well under 1 percent each, advisors who together hold several percent of a pre-seed company deserve a question.
• Grant size versus contribution. A 1 percent grant to a well-known name who joins one call a quarter is a red flag. 0.25 percent to someone who introduced the first three enterprise customers is arguably money well spent.
• Vesting status. Check that grants are vesting, not fully vested at signing.
• Instrument and paperwork. Investors typically expect NSOs granted under the equity plan at the current 409A strike with board approval and a signed agreement, and restricted stock with a filed 83(b) election.
• Conflicts and pool accounting. Advisors who advise competitors or sit at a customer can create problems, and investors negotiating pool size want to know how much advisors already hold.

A big, fully vested grant to someone who stopped showing up is what we'd call dead equity. It's one of the first things we look for, and our take on reading the cap table first explains why.

"But the right advisor is worth far more than 0.24 percent"

Sometimes that's true. A seasoned operator who opens doors to your first enterprise buyers can change the company's trajectory, and pricing that at the median can mean you don't get it.

But.

The fix for a truly valuable advisor is usually a bigger role, not a bigger advisory grant. If someone's contribution looks like a part-time job, treat it like one, with deliverables and a vesting schedule to match. Advice itself is cheap and plentiful, which is roughly our view on startup mentorship. Access and execution are what's scarce.

Tax and legal points about advisory shares

For NSO holders. Under the IRS rules for nonstatutory options without a readily determinable value (IRS Topic 427), there is no tax at grant, the spread at exercise is taxable income, and later gain or loss on sale is generally capital. Cooley GO notes that the standard post-termination exercise period is three months, and that advisors may negotiate a longer window, which helps given the tax cost of exercising NSOs.

For restricted stock holders. The IRS requires an 83(b) election to be filed no later than 30 days after the shares are transferred (the IRS now offers Form 15620 for it). It lets the advisor pay tax on the tiny current value rather than on each vesting tranche.

For the company. Carta's 409A guide notes that new option grants must be priced at or above the fair market value from the most recent 409A valuation (see the 409A valuation investor guide). Grants are typically also approved by the board and recorded on the cap table.

Our take: a simple way to size advisor equity

Three steps that tend to work at pre-seed and seed:

1. Define the job in writing. Monthly call, specific intros, or a project with deliverables.
2. Size the grant to the job. One approach is to use the FAST grid as a ceiling and Carta's medians as a reality check. At pre-seed, a monthly-call advisor usually lands between Carta's 0.24 percent median and FAST's 0.50 percent. We'd keep 1 percent for expert-level help that behaves like a part-time role, and scale down at seed and Series A.
3. Vest over 12 to 24 months with a three-month cliff and a termination clause. Revisit at each financing.

None of this should scare founders off advisors. Good ones at pre-seed are often the difference between finding product-market fit and running out of runway. But equity is one of the scarcest things an early company has. For the founder's side of recruiting and managing advisors, see startup advisory boards.

Angels who want to practice this kind of review on real deals can do it inside 1752vc's Emerging Angels program, an 8-week live program for accredited investors who are new to angel investing. It gives them a seat at the table in a working fund's investment process, with live diligence calls, deal reviews, monthly Investment Circles, and a private community, so advisor grants get read on real cap tables.

The bottom line

Advisor equity works when it's small, vesting, written down and tied to a job. It goes wrong when it's big, upfront and tied to a reputation.

A good advisor earns the grant month by month. A famous one sometimes just collects it.

Key takeaways

• Advisory shares are ordinary equity, usually NSOs or restricted common stock, granted to non-employee advisors for services.
• Market grants are small: Carta's 2025 data puts the median pre-seed advisor grant at 0.24 percent, and only about 1 in 10 advisors reach 1 percent.
• The FAST agreement (Version 3, July 2026) suggests 0.10 to 1.00 percent depending on stage and engagement, which works best as a ceiling.
• Advisor grants typically vest monthly over 12 to 24 months with a short cliff, matching the short useful life of most advisor relationships.
• Investors often check total advisor allocation, vesting status, paperwork, and whether each grant bought something the company could not get otherwise.

Frequently asked questions

What are advisory shares?

Advisory shares are equity grants, typically non-qualified stock options or restricted common stock, that a startup gives to an outside advisor in exchange for guidance, introductions, or expertise instead of cash. They are not a separate class of stock. They dilute every holder like any other grant and usually vest monthly over one to two years under a written advisor agreement.

Are advisory shares stock options or restricted stock?

Either. Very early companies often issue restricted stock while the common is worth almost nothing, and the advisor files an 83(b) election within 30 days. Once a company has a 409A valuation, non-qualified stock options are more common. Advisors are not employees, so they cannot receive incentive stock options.

Is 1 percent too much equity for an advisor?

Usually, in our view. Carta found the median 2025 pre-seed advisor grant was 0.24 percent and only about 1 in 10 advisors reached 1 percent. The FAST agreement reserves 1 percent for an expert-level advisor at pre-seed. A 1 percent grant tends to make sense only when the advisor's involvement looks like a part-time role with clear deliverables.

How are advisory shares taxed?

For non-qualified options, the IRS treats the grant as a non-event, taxes the spread between fair market value and strike price at exercise as income, and treats later gain on sale as generally capital. For restricted stock, an 83(b) election filed within 30 days of transfer lets the advisor pay tax on the low current value up front.

What do investors look for in advisor equity grants?

Investors typically check the total held by advisors, whether each grant is vesting rather than fully vested, whether options were granted at the current 409A price with board approval, and whether signed agreements cover IP and confidentiality. The core question is usually whether each grant bought help the company could not otherwise get.

Sources

• Founder Institute: FAST Agreement
• Carta: Pre-Seed Advisors Receive a Median 0.24 Percent Equity
• Carta: Advisory Shares, What Founders Need to Know
• Cooley GO: Advice on Advisor Option Grants
• IRS: Topic No. 427, Stock Options
• IRS: Form 15620, Section 83(b) Election
• Carta: What is a 409A Valuation? Key Concepts and Process