How much equity to give board members of a startup?

Hi Andrew. I've been in the C level, advisory, and investor roles at early stage companies. I'm certainly not an expert compared to many who frequent HN, but I hope I can add a bit of value.

There's no need to give up a board seat. Normally your lead investors will be taking a seat, and it could cause you issues when you try to raise.

You want to recruit some advisors who can move the needle for you with complementary skills. Ideally you just pay them cash, however being early stage may mean offering equity instead. You can do this as a vested option purchase at fair valuation. You need to be clear on what you expect from them, and obviously they must also believe their effort is going to be worth their time.

Take a look at the FAST agreement to get a better idea of how to approach the situation. https://fi.co/fast

Don't give anyone a board seat until or unless you're forced to at Series A or later. Absolutely do not give one up before then.

What you're asking about sounds more like a board of advisors, which some companies do have. But the general advice is you should never give someone equity for nothing. So if you want someone to be an "advisor," ask them to invest a small amount (e.g. a $5k SAFE) in exchange for an "advisor" title.

Do NOT give away your equity or board seats. That's just dumb.

none, until you're years later or making a lot of $$$

but you do want advisors for now, and also to start testing some to be your own future board members when you vs VCs start adding them.

two types of advisors:

- angel investors. they will give you money, and on-demand, a bit of really smart advice. mostly tiny bits as part of your monthly internal updates and your less frequent syncs (if many). some might get more involved, but you won't know who!

- paid advisors (cash or equity). I probably wouldn't do yet as you don't know which you need, and an angel can help you figure that out (ceo coach, someone for tech vs sales vs marketing vs hr ...). cash or equity. if equity, look up advice columns. but basically, give less than you'd think and for 1yr (can renew next year, but make manual, not default) and for specific mutually agreed upon tasks and meeting schedule. especially early on as it seems here, you won't know who you need, so wouldn't go heavy here

- edit: third type is your senior staff. also get VPs who have done your current + next stages before :) but generally not until raised 1M

fwiw, it does sound like you would benefit from finding 1-3 senior startup-experienced angels (successful/serial ceo who have led seed stage + series a + m&a) to invest and help guide on basics. there are good answers here, but they're without context and thus prioritization & specialization. there are a lot of generic basics they can help save time on + avoid making timebombs + give leverage, and in turn , help you identify where you need specialists, and pragmatics like when & how, until you build your own intuition & recruiting process

Thinking about this topic and putting in time / energy may be an indication you are playing house with your startup.

I believe PG has an essay that touches on advisers.

When you say "board of directors" do you really mean "board of advisors"? A board of directors has voting power to make decisions. A board of advisors just gives advice and helps make connections.

Go for mentors / advisor rather than board as others have said you only really need that for A or in preparing for A round.

For mentors / advisors you can give some uplift in their equity beyond what they will get for their investment (honestly they should invest something to have some skin in the game).

An exception might be if they are rainmakers in the industry your operating in and you need them to open doors, in which case link payment to success, I wouldn't give anything upfront. If they believe in you and your business they should take the deal.

Some good advice has already been posted. I would suggest advisory board at most (be clear about the reason for inclusion of each person, carry no ballast, give them something to do), an option to take a 1st look at an early investment round (without defining price, which would be meaningless anyway at this point). Although dull and unexciting you may find your local equiv of NVCA, BVCA etc has some good documents to help you.

Most important of all is that an advisor should earn their spot. There’s no shortage of “room meat” who will happily sign up to “advise” a dozen companies while providing zero real value to you or your company. Good luck.

Early on you don't need a board. At Series A you probably need to give one seat to the investor.

You can have all kinds of mentors and advisors who don't need to be part of the board. You don't necessarily need advisors either. If you want to someone to help you with the company, it's best to hire them or ask them to become investors and that way receive the equity.

Equity is very valuable so you shouldn't be giving it out. People should earn it or pay for it. If you must really get someone then consider very small amounts, like <1%.

When I looked into this several years ago, the advice was to give .5% or so (on a 2 year vesting schedule) to advisors who were going to be providing value based on their expertise/networks.

I can see that this is an unpopular position here on HN, but wanted to share so it's clear that some founders do give small amounts of equity to early advisors.

Unless they are the investor who owns significant shares, otherwise I don't think giving them board is a good idea.

Consider consultant maybe?

If they're in a financial position to do so, have them angel invest in the startup. In general my experience has been expert angels add a lot more value than advisors.

why to give them? sell them cheap so they are vested and make sure they have interest in your success.

otherwise its a probable waste

Dennis Remix reminds us in “How to get Rich” to grimly hold on to control of the organisation we’re building.

None. Board members are typically already owners, either by being founders or investors. Giving away more equity just to have one more person at the table is counter-productive.

As corporations grow larger and more mature, board members may be compensated, but that is typically cash.