Advisory Agreement
An advisory agreement formalises the relationship between a startup and an advisor, typically providing equity or cash compensation in exchange for strategic guidance.
What is a Advisory Agreement?
An advisory agreement is a contract between a company and an advisor that sets out the terms of the advisory relationship, including the nature of the advice to be provided, the time commitment expected, the compensation structure (equity or cash), and the handling of confidential information and IP.
Startups frequently engage advisors — experienced entrepreneurs, industry experts, or senior executives — to provide strategic guidance, introductions, and domain expertise. Without a formal agreement, these relationships often lead to disputes about equity expectations, scope, and what happens if the advisor leaves or underdelivers.
Advisory agreements are particularly important when equity is involved. A typical advisor arrangement grants 0.1%–1% equity, usually with a vesting schedule tied to the advisor's ongoing engagement. The agreement should specify exactly what the advisor is expected to deliver in exchange for that equity.
When do you need a Advisory Agreement?
- ✓When engaging an industry expert to provide strategic or operational guidance
- ✓When offering equity to an advisor in lieu of or in addition to cash
- ✓When bringing on a technical advisor to assist with product development
- ✓When an investor or board member provides advisory services outside their formal role
- ✓When engaging a sales or marketing advisor with industry connections
- ✓Before publicly listing an advisor on your website or pitch materials
Key provisions to include
Advisory Services
Defines the specific type of advice, introductions, or support the advisor is expected to provide.
Time Commitment
Sets the minimum hours per month or meeting cadence the advisor is expected to maintain.
Equity Compensation
Specifies the equity grant, vesting schedule, and any cliff provisions tied to ongoing engagement.
Cash Compensation
Records any cash fees, expense reimbursements, or per-meeting payments.
Confidentiality
Obligates the advisor to maintain confidentiality of proprietary information shared during the engagement.
IP Assignment
Assigns any IP created by the advisor in connection with the advisory services to the company.
Term & Termination
Sets the duration of the advisory relationship and the conditions under which it can be terminated.
Common mistakes to avoid
Not specifying what the advisor is actually expected to do, making it difficult to assess whether they are delivering value
Granting equity without a vesting schedule, giving advisors full equity regardless of ongoing contribution
Granting excessive equity to advisors who provide limited strategic value — typical advisor grants are 0.1%–0.5%
Not including confidentiality provisions, exposing sensitive business information to advisors without legal protection
Failing to include an IP assignment clause, leaving open the question of who owns any ideas or materials developed by the advisor
Frequently asked questions
How much equity should I give an advisor?
Advisor equity grants in Australia typically range from 0.1% to 1%, depending on the advisor's seniority, the stage of the company, and the expected time commitment. Most grants are on a 12–24 month vesting schedule with no cliff. Grants above 1% are rare and typically reserved for advisors who provide very significant time or network value.
Does an advisory agreement need to be filed with ASIC?
No. An advisory agreement is a private contract and does not need to be filed with ASIC. However, if equity is being issued to the advisor, the share issuance itself must comply with the Corporations Act, including updating the company's cap table and share register.
What is the difference between an advisor and a board member?
An advisor provides informal guidance and is not a director or officer of the company. An advisor has no fiduciary duties and does not participate in formal board decisions. A board member is formally appointed, has fiduciary duties under the Corporations Act, and participates in board governance. Advisors typically receive less equity than board members.
Related documents
Draft your Advisory Agreement in minutes
Try Neureson free for 3 days — no credit card required.
Start for free →