With a single signature and a checkbox on the FAST agreement, contractors and advisors can agree in minutes on how to work together, what to achieve and the right amount of stock compensation. « Acquisition doesn`t make as much sense for consultants as it does for employees, » says Amit. That`s because businesses are changing quickly and the consultants you need at the boot stage are likely to be different from the ones you want in the B series and beyond. The Founder/Advisor Standard Model (« FAST ») was developed by the Founder Institute to help budding entrepreneurs in the startup programs we run globally set up advisory boards and connect with the mentors they interact with throughout the program. In 2011, the Founder Institute made the FAST agreement public, and since then we have made gradual updates to version 1 of the agreement. On August 1, 2017, the Founder Institute released a draft version of version 2 that includes a number of improvements: The FAST agreement aims to save time and money in negotiating relationships with consultants. There is only one page to fill out and no legal assistance is required. The founder`s FAST agreement was a good start, but his percentage allocation proposals can be somewhat simplified and do not include standard guarantees for companies. Since the last quick update of the contract (2017), several laws, including employment, have changed. The goals of a consulting relationship can be quite unclear.
Help yourself and your advisor align by entering into a signed agreement that states: Avoid a four-year plan, as most consultants will deliver most of their value in advance. You can visit the relationship again and again after a year or two and see if you want to continue. The two terms you`ll hear most often in SAFE agreements and most seed funding agreements are pre-money valuation and post-money valuation. Pre-money is the valuation of the business before investments take place. Post-monetary valuation often refers to the value of the company after an investment cycle. B for example the sale of a round of Series A shares. Here`s a guide to help you understand how to target advisors and their incentives: Choose your advisors like a co-founder. At best, a consultant can be critical to your success as a business. In the worst case, they can be a distraction and a waste of precious time or even a burden. Know what you`re getting into by identifying the type of advisor you want: Many suggestions on how much equity to allocate to individual advisors come from anecdotal experience. But at Carta, we have data that gives real insight into what`s really going on. So we looked at the advisory shares issued in 2019 for companies that raised less than $2 million.
Here are the most common deals we`ve seen: First, find out what you expect from a consultant. You want someone who can help you compensate for a weakness you have. Matias Vukusic [00:03:48] Yes, it is the same one that has been translated into several languages and applies to different jurisdictions. There`s even on a credit page that you can even find ice caps that say like India, let`s use them for India-based companies, for startup base in India. Even in Chile, there is the Academy, an organization founded by local venture capital firms, and they have their own version of the secure agreement in Spanish. But what it is, they usually don`t respect what the safe is, and they mostly use the name, they say. I mean, you guys, you Americans are great with acronyms. You have the safe like The Keys. How, keep security simple. You make the boss believe that you`re doing well, and you`re awesome.
How do you like it when this marketing looks like documents, right? And that`s where demolition usually begins. For example, if you like something, a document called a safe, but then you start checking it and it`s not so safe. I mean, for example, as with some lawyers, investors tend to design convertible bonds, and they give them the name, let`s say, you know, because it sounds chic and marketable. But they are very different from the Y combiner, like when I prepared this because I only did my job for example, I did it and I came across a document that is actually easier to understand the future equity of the company. But it had nothing to do with Y Combinator. Things like, for example, these Estonian companies had a maturity date and say that they are not such large debt securities, do not happen to this day. So that`s one thing that for us, as international lawyers, is that whenever we go through Law Insider, we can find documents called Say It or like Tableau. It`s something, but they`re not who they say they are. But fortunately, there are also a lot of good documents, and there are states that are really websites and not just marketing words for you that bring your family, friends together and fall into the early stages. That is the case.
I shouldn`t say falls. We say fans who say big, family, friends and believing fans. The SAFE Agreement has been translated into several languages and applied in many jurisdictions. Startups in India have a version of the SAFE agreement. There is also a Spanish-translated version that Chilean and Spanish-speaking startups use. The most important thing to remember is that your company cannot get a good deal unless the specific SAFE agreement is reviewed by a lawyer and modifies the clauses according to your situation. Unfortunately, this takes some time. And in this world, time is the only thing startups don`t like to spend. GUEST: Matias Vukusic is a Chilean startup lawyer who handles many SAFE deals in the venture capital industry. He is vukusic.cl reachable on Twitter, LinkedIn or his website. The valuation of the company is crucial for the SAFE investor because the value of the company determines the percentage of the investor`s equity at the time of the triggering event.
The first Y Combinator SAFE deals were pre-monetary valuations, but today most investors prefer SAFE deals after money. « You basically create a job description, » Clayton says, « and you want to look for consultants. » For example, if this is your first time raising funds, it can be helpful to have the ear of someone who has done it several times. If your B2B team is strong in data and engineering, you may want someone who has experience selling to Fortune 500 companies. « Find a consultant who not only fits what`s on paper, » Clayton says, « but also fits your culture and can work with you. » Some deals have a three-month cliff, which gives the parties time to determine if the relationship adds value and works. A classic approach for an entrepreneur to hire a consultant could follow these broad lines. Founders, before giving equity to an advisor, decide if it`s worth it. If you generate revenue, can you afford to pay it instead? If you can`t afford them, an equity agreement could be the beginning of a useful partnership. Early-stage companies can try Carta Launch when they need help issuing shares, whether from advisors, investors or employees. Contractors must deal carefully with consultants.
Just because someone has a good reputation or expertise doesn`t mean they`re a good consultant or there`s the necessary level of good chemistry. The Founder Institute recommends that an entrepreneur work with a potential advisor for at least a month and spend at least 8 hours together before discussing the FAST agreement. .