The FAST Agreement is used by tens of thousands of entrepreneurs and advisors per year to establish productive working relationships, trading advice and support for a standardized amount of equity.
The Founder / Advisor Standard Template ("FAST") was developed by the Founder Institute to help aspiring entrepreneurs in the startup launch programs that we operate worldwide set-up advisory boards and engage with the mentors that they interact with throughout the program. In 2011, the Founder Institute released the FAST Agreement to the public, and we have been making incremental updates on the Version 1 of the Agreement ever since. On August 1st, 2017, the Founder Institute has released Version 2, which includes a number of enhancements:
- The FAST Agreement can now be localized into any legal jurisdiction where corporate law supports the granting of options or restricted stock without having to hire a lawyer.
- The Advisor commitment levels have been simplified and standardized.
- The signing of the Agreement has been simplified.
- The enforceability of the Agreement has been improved.
Using the FAST Agreement, you can check a few boxes, sign the Agreement and start working. There is no longer the need for cumbersome negotiation, legal drafting and review.
The FAST Agreement
With just a signature and a checkbox on the FAST Agreement, entrepreneurs and advisors can agree in minutes on how to work together, on what to accomplish, and on the right amount of equity compensation.
New FAST versions are being refined based on feedback. If you have comments, please Contact form linked to at the bottom of this page to submit them.
Engaging an Advisor
Entrepreneurs should engage with advisors carefully. Just because someone has a good name or has domain expertise does not mean that they are a good advisor or that there is the necessary level of good chemistry. The Founder Institute recommends that an entrepreneur work with a potential advisor for at least one month and spend at least 8 hours together before discussing the FAST Agreement. The FAST Agreement does include a three-month "cliff" on equity vesting, allowing for an unproductive advisory relationship to be terminated without having the burden of allocating any equity within the first three months.
A classic approach for an entrepreneur to engage an advisor might follow the following outline.
- Research: The entrepreneur identifies between 10 and 15 target advisors that could help their business grow exponentially.
- Contact: Using Linkedin and Crunchbase, the entrepreneur identifies people that are known in common and secures an introduction.
- Meeting: The entrepreneur sends a five sentence introduction and requests a call, coffee or lunch.
- Request: If the chemistry is good with the advisor, the entrepreneur makes a small request of the advisor to test out the working relationship.
- Opportunity: If the request leads to a successful relationship dynamic, the entrepreneur presents an opportunity for the advisor to engage more formally with the business without discussing compensation.
- FAST: If the advisor agrees to engage, the entrepreneur sends the advisor the FAST Agreement.
If you are interested in engaging with dozens of potential mentors and advisors to build your startup, then consider applying to a local Founder Institute program. You can apply at the link here: Apply to FI's Core Program
The FAST Overview
There are three levels of company maturity that influence the equity compensation: idea, startup, or growth. There are also three levels of engagement for an advisor that also influence the compensation: standard, strategic, or expert. So, for example, if an advisor provides an early-stage startup with an expert level of help by meeting with the team monthly, recruiting some talent, and taking a customer call, then that advisor will earn 1% of the company in the form of restricted stock or options vesting over a two year time period; while a similar level of engagement for a growth stage company is compensated with just 0.6%. The FAST equity compensation framework is outlined below, and the full Agreement explaining everything follows.
The FAST FAQ
Why should I use the FAST Agreement?
The FAST Agreement is designed to save time and money negotiating advisor relationships. There is just one page to fill out, and no legal assistance is necessary.
Can I modify the FAST Agreement?
The FAST Agreement is free and can be modified as you need. Please check any modified FAST Agreement against the original template to ensure that you are not signing any unexpected terms.
Why compensate advisors with equity only?
The advisors that the FAST Agreement targets are founders and high-level executives for strategic advice through advisory board roles, and these advisors are normally compensated with equity. The FAST Agreement is not designed for traditional project consulting and "work for hire" relationships.
How much equity should I allocate to advisors?
The FAST Agreement recommends standard equity grants for an individual advisor. It is not uncommon for a technology startup to have a 5% pool of equity allocated to a group of strategic advisors or an advisory board.