How much equity should I give my advisors?

A lot of startups work informally with advisors. That's fine as long as the time commitment is not significant. However, sometimes the startup may want to enter into a more formal engagement with the advisor. Since startups are cash poor and equity rich, equity is a pretty typical way that startups can use to compensate advisors who are spending significant time, and/or reaching deep into their own networks to help the startup build their business. 

Techcrunch has an article providing guidelines on what is a reasonable amount to give an advisor. In this article they suggest that startups should give out more equity if they are just getting started (idea stage), and more equity if the advisor is doing more work / spending more time and personal capital on the startup. Note that the article is from 2011, so the numbers may have changed by now.


Source: "Free startup docs: How much equity should I give my advisors?" by Rip Empson, Founder Institute, via TechCrunch, September 2011

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