The Angel Capital Association (ACA) has just released a new model convertible promissory note template on their website.

The last few years have seen a dramatic increase in the use of convertible instruments for early stage financings.

The two primary means of effecting these financings are SAFEs (Simple Agreement for Future Financings) and Convertible Promissory Notes (“Convertible Notes”).

The former typically utilizes established form agreements created by the Y Combinator accelerator. These agreements have several defined template flavors.  By contrast, Convertible Notes do not have a single established template, making review more time consuming and expensive. 

Learn more and get editable sample documents here.

This invaluable resource combines common provisions with best practices to balance the rights of founders and investors, making early-stage financings smoother and more equitable.

Whether you're a seasoned investor or a budding entrepreneur, this model note can help you navigate the complexities of early-stage funding.

Check it out today and take advantage of the ACA's commitment to empowering the investment community!

You can find the new Convertible Promissory Note and more ACA publications here:
https://www.angelcapitalassociation.org/angel-insights-publications/

Every startup needs advisors, mentors, and friends.  But how much should a new venture compensate those people for their expertise and involvement?

Cash is rarely an option to offer advisors when a startup is new.  So usually advisors are granted small equity stakes in the startup companies they advise. 

Every advisor wants more, and of course the founders want to give less of their company's stock...  

So, how much stock to give Advisors to reduce this tension?

Luckily advisor compensation standards have emerged in recent years that can help resolve this dilemma. 

Today startup founders can consult industry norms to make fair and consistent grants of stock options, warrants, or restricted stock type compensation to the advisors who volunteer to help their startups grow.

The FAST Template for Startup Advisor Equity Grants

Our recommended resource for helping to determine how much stock your company should grant to outside advisors is the "Founder / Advisor Standard Template" (FAST) from the Founders Institute.

This helpful, free template is easy to use to provide structure and legal documentation of a startup's relationship with an advisor.

The FAST document outlines several levels of engagement to help quantify the obligations and participation level that an advisor offers to a company.  These range from Standard to Strategic to Expert levels of contribution from the advisor.

Then, in return for those contributions of expertise, the document outlines suggested amounts of equity to grant.  And those grants are scaled to reflect how far along the startup is in its life cycle - from idea stage to startup stage to growth stage.  (The size of the suggested advisor equity grants get smaller as the company grows up.)

The FAST also includes important basic protections for the company on topics like confidentiality, intellectual property assignment, expense reimbursement, and a vesting period before the advisor takes ownership of the common stock, stock options, or restricted stock. 

Of course, like most contracts, the FAST is negotiable and can (and should) be modified if the needs of both parties suggest it.  And getting real legal advice from an attorney who specializes in startup company financing is recommended, as well.

Thanks very much to the Founders Institute for creating and sharing the free Founder / Advisor Standard Template (FAST).

It's a very useful resource that has helped standardize equity grants for startup advisors.  

See and download the free FAST template to help with your startup's advisor stock grants here. 

Feedback?

Please let us know in the Comments below if you use the FAST for your company and any feedback or suggestions you have to help other founders use it effectively, too? 

Watch also for our upcoming post "Board of Directors vs Advisory Board:  How to Award Seats to Investors and Mentors"...

UPDATE:  THIS POST IS GETTING LOTS OF ATTENTION - GLAD IT IS HELPFUL TO SO MANY OF YOU!

CAN YOU PLEASE TAKE A SECOND TO LIKE & SHARE IT ONLINE, TOO?  MORE ENTREPRENEURS NEED HELP WITH THIS ISSUE!