Overview of a FAST Agreement
What is a FAST Agreement?
Essentially, a FAST Agreement is a short, simple contract by which a company engages a person to act as its mentor or advisor.
Typically, under a FAST Agreement, the advisor does not receive any cash compensation for his service in return. But, instead has the right to receive shares in the future. In essence, the shares may be vested to the advisors on various stages of growth of the company or a fixed vesting schedule. Importantly, by using a FAST Agreement, the advisor serves as an independent consultant, not as an employee.
What is a FAST Agreement?
In essence, FAST stands for “Founder Advisor Standard Template”. Firstly, it was created by the Founder Institute to help aspiring entrepreneurs in the startup set-up advisory boards and engage with the mentors. Notably, the template was first released by the institute in 2011. Then, a new version of the template was released in 2017. Importantly, it has since been in use by tens of thousands of entrepreneurs and advisors per year to establish productive working relationships. Additionally, for trading advice and support for a standardized amount of equity.
Why should I use a FAST Agreement?
Usually, many entrepreneurs face this problem where they have great business ideas and plans for their company. But, they need some guidance on how to take the next steps and are in need of an advisor. At this stage, they cannot provide cash compensation. However, they can promise a share in the company’s equity as the company grows. And, according to the performance of the advisors. Essentially, if find you are in a similar situation, you can use a FAST Agreement to appoint advisors.
Notably, the FAST Agreement is intended for an advisor or a mentor who will assume an advisory role in the business. However, if you wish to engage this person to give core input to your business or perform executive functions, use an Employment Contract or a Director’s Service Agreement (if the person will be appointed as a director).
Key points included in a FAST Agreement
- Services you expect to receive from the advisor;
- Type and amount of shares that the advisor will receive;
- Schedule for vesting of the shares;
- Mechanism under which the advisor will receive shares; and
- Independent i.e. no employer- employee relationship
- Non-disclosure agreement
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Along with this document, make sure you see these other templates in our library:
- Shareholder Agreement
- Option Agreement
- Employee Option Repurchase Agreement
- Share Appreciation Rights Plan
- Share Option Plan
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