What Is an Advisory Board?
An advisory board is a group of outside experts who give a startup guidance and introductions, usually for a small equity grant, without the legal duties of a board of directors.
How it works
Advisors are people with experience the founders lack: industry knowledge, sales skill, technical depth, or investor relationships. They meet with the founders occasionally and make introductions. Unlike a board of directors, an advisory board has no legal authority, does not vote on company decisions, and does not carry a director's fiduciary duties (the legal duty to act in the company's interest).
Advisors are commonly paid with a small grant of stock options or restricted stock that vests over time, often one to two years, with the amount depending on their involvement. Amounts vary widely, so there is no single norm to rely on. Put terms in a written advisor agreement.
Example
Suppose a founder building medical software signs a former hospital administrator as an advisor. They agree on a grant of 0.25 percent of the company, vesting monthly over two years, in exchange for one call a month and three customer introductions. If the advisor stops helping after six months, only the vested portion is kept, which protects the company.
Why founders care
Good advisors can open doors and add credibility, especially to a first-time team. Poor ones take equity and give little. Equity also has a lasting cost, since it dilutes the founders and appears on the cap table that investors review.
Common mistakes
- Giving large grants for a famous name with no real commitment.
- Skipping vesting, so an inactive advisor keeps all the equity.
- Not writing down what the advisor will actually do.
- Forgetting that confidential information needs an NDA and that IP created must be assigned.
Frequently asked questions
What is an advisory board?
An advisory board is a group of outside experts who counsel a startup informally. They have no voting power or director duties and are typically compensated with a small, vesting equity grant.
What is the difference between an advisory board and a board of directors?
A board of directors is a legal body elected by shareholders with authority over major decisions and fiduciary duties. An advisory board only gives non-binding advice, and its members cannot vote on company matters.
Related terms
Go deeper
- How to Find a Co-Founder and Know If They Fit GuideHow to find a co-founder: do you need one, where to look, how to test the fit, solo founder vs co-founder, and the red flags that should make you walk away.
- How to Split Equity Between Co-Founders (and Vesting) GuideHow to split equity between co-founders: factors to weigh, equal vs unequal splits, 4-year vesting with a 1-year cliff, and a worked example with round numbers.
- Trade Secrets for Startups: NDAs and Secrecy Steps IP guideTrade secrets for startups: what qualifies, what reasonable secrecy measures look like, when to use an NDA, and whether investors will sign one.
All 70 startup terms · More terms starting with A · Guides
General information, not legal, tax or financial advice. Reviewed 11 November 2026.