An important problem facing the 4,500 graduate companies and 18,000 mentors of the founding institute is the formation of a consultant agreement. We have literally hundreds of consulting agreements to check out – and each one is different. RSAS seems to have a larger percentage, since they are usually issued shortly after their creation before the fair value of a business increases. The sooner a consultant joins a company, the higher the fully diluted amount normally granted to him. Business leaders should take care of consultants carefully. Just because someone has a good reputation or has expertise doesn`t mean they`re a good advisor or there`s the level of good chemistry needed. The Founder Institute recommends that an entrepreneur work with a potential consultant for at least a month and spend at least 8 hours together before discussing the FAST agreement. Consultants can give valuable advice if your business is located in a prominent location. Most startups (especially pre-seed startups in the idea phase) don`t have the means to adequately compensate consultants, so equity turns out to be a natural solution: give the people who help you increase growth a certain percentage of the business to reward them in the long run. Experienced consultants may have a framework that they have used before – as soon as it is time to talk about compensation, they can come up with a structure with which they are familiar. It`s up to you to determine if it`s useful for your business. If not, work with your lawyer and counsel to find an agreement that works. If you decide to provide equity, think about the consultant`s expertise and the phase your business is in when determining the amount..
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