How the board of directors differs from an advisory board: legal authority, equity grants, cadence, and when each is worth setting up.
Board members and advisors sound similar. Legally and operationally they are very different. Confusing them is a common early-founder mistake that costs equity and slows decisions.
Elected by shareholders, owes fiduciary duties to the company. Approves major decisions: budget, option grants, financings, acquisitions. Meets on a formal cadence with minutes. Board seats appear in the term sheet at Series A.
Informal group. Provides advice, opens doors, lends credibility. No fiduciary duty, no vote on company decisions, no legal role. Meets ad hoc — quarterly dinner, monthly call, or purely as-needed intros.
Investor board seats: no equity (they represent their fund's investment). Independent board members: 0.25–1% vesting over 2–4 years, often with a cash retainer for larger companies.
Typically 0.1–0.5% per advisor, vesting over 1–2 years. The FAST agreement from Founder Institute is a common template. Grant sparingly — 5 advisors at 0.25% is 1.25% of the company for informal help.
Board: after Series A, when investors require it. Add an independent seat after Series B to break founder-investor deadlocks. Advisors: any stage, one at a time, only for specific gaps (regulatory expertise, industry access, technical depth you lack).
Founders sign 5–10 advisors early hoping for magic. Most advisors do nothing after the first quarter. Grant equity only after a defined 6-month contribution — never upfront based on a name.
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