What are Advisory Shares?

Advisory Shares are equity compensation given to company advisors, typically in early-stage startups, in exchange for their expertise, network, or strategic guidance. These shares are usually granted on a vesting schedule, contingent on the advisor continuing to provide services.

How Advisory Shares Work

  • Equity Grant Agreement: Specifies the number of shares or percentage ownership, vesting terms, and advisory responsibilities.

  • Vesting Period: Often 1 to 2 years, with monthly or quarterly vesting.

  • Non-Cash Compensation: No salary involved; value depends on the company’s future valuation.

Example

A startup grants 0.5% in advisory shares to a former CEO in exchange for market expansion guidance and investor introductions over 18 months.

Benefits

  • Attracts high-profile advisors without immediate cash outlay

  • Aligns advisor incentives with company growth

  • Adds industry credibility