The Advisory Agreement: 9 Clauses Every Advisor Should Understand

Most advisor relationships start well. A founder and an experienced person have a good conversation, agree to work together and shake hands. Six months later the founder wonders why the advisor is not more involved, and the advisor wonders when the promised equity will arrive. Nobody did anything wrong. They just never wrote down what they had agreed.

A short written advisory agreement prevents this. It does not need to be long or expensive. It needs to answer a handful of questions that both sides will otherwise answer differently in their heads. This guide goes through those questions, clause by clause, from the advisor's side of the table.

This article is general information, not legal advice. For anything unusual, have a lawyer in your own country read the agreement before you sign.

Why put it in writing at all?

An agreement is easiest to make at the start, when both sides are positive and nothing is at stake yet. The same conversation in the middle of a disagreement is much harder. A written agreement also protects the advisor in ways that are easy to forget: it records that you are independent and not an employee, that you cannot sign for the company, and what you are and are not responsible for.

It also helps the company. Investors look at advisor agreements during due diligence. An advisor who holds equity without a signed agreement is a question mark on the cap table, and founders know that.

The nine clauses every advisor should understand

1. Scope and deliverables

What will you help with? Be specific: "help prepare the Series A pitch and introduce the company to three relevant investors" is a scope, "general strategic advice" is not. Write down what is outside the scope as well. If the founder later wants you to run the sales team, you both know that is a new conversation.

2. Term and termination

How long does the agreement run, and how can either side end it? A fixed first term, such as six or twelve months, with a review at the end, works well. Make sure either side can end it with reasonable written notice. Advisory relationships that cannot be ended cleanly tend to drift instead.

3. Time commitment

Agree on a number: hours per month, one meeting a month plus email, or a set number of days. Also agree how quickly you will normally respond. Unclear time expectations are the most common source of disappointment on both sides.

4. Compensation and vesting

Write down exactly what you get: a monthly retainer, a fee per piece of work, equity, or a mix. For equity, the agreement should say what kind (shares or options), how much, what the percentage is calculated on, and how it vests. Vesting means you earn the equity gradually over time, which protects the company if the relationship ends early. Check what happens to unvested equity if the agreement is terminated, and what happens if the company is sold.

5. Intellectual property

Who owns the ideas, documents and materials created during the work? Usually the company owns what you create for it. Make sure the clause does not also claim your own existing know-how, frameworks or materials that you bring to every client.

6. Confidentiality

You will see plans, numbers and problems that are not public. The agreement should say what counts as confidential, how you must protect it, and for how long the duty lasts after the engagement ends. Expect the duty to continue after the end. That is normal and fair.

7. Conflicts of interest

List the roles you already hold: other advisory roles, board seats, investments, a consulting business. Agree that you will disclose new possible conflicts in writing as they come up. This protects you as much as the company, because a conflict disclosed early is rarely a problem, while one discovered later almost always is.

8. Status and authority

The agreement should state that you are an independent advisor, not an employee, and that you have no authority to sign contracts or make commitments on the company's behalf. This matters for tax and employment law, and it keeps the decision rights where they belong: with the company.

9. Expenses

Travel, software, event tickets: say what the company will reimburse and how expenses are approved. A one-line rule such as "pre-approved expenses are reimbursed against receipts within 30 days" avoids awkward conversations later.

Use a standard instead of a blank page

You do not need to draft from scratch. The FAST agreement (Founder Advisor Standard Template) from the Founder Institute is an open, free template made specifically for advisors of early-stage companies. It is short, it is designed to be fair to both sides, and many founders already know it. You can find it at fi.co/fast.

Even when a company prefers its own template, a standard like FAST is a useful reference. If the company's version differs a lot from what is common, ask why.

What to check before you sign

• Does the scope match what you actually discussed?
• Is the time commitment realistic for you, every month, not only in a quiet month?
• Do you understand exactly what the equity is, what it is a percentage of, and how it vests?
• Can you end the agreement with reasonable notice?
• Have you disclosed the other roles you hold?
• Is there anything you would not be comfortable explaining to the company's investors?

Advisory agreements and Boardio

When you find an advisory role through Boardio, your advisory agreement is between you and the company. Boardio is not a party to it. If the company used Boardio's Turnkey service to run the search, that agreement is between Boardio and the company and covers the search itself, not your work as an advisor.

Learning to work as an advisor? Advisor Essentials is Boardio's free training on what it takes to work as a business advisor, from compensation and agreements to the first 90 days.

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