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What is a FAST Agreement?

A FAST Agreement is a simple contract by which a company engages a person to act as its mentor or advisor.

Typically, under a FAST Agreement, the advisor receives no cash compensation for their service. Instead, they have the right to acquire shares in the future.

A business may also use a share vesting agreement to agree upon future share allocation to the advisor.

Importantly, using a FAST Agreement, the advisor serves as an independent consultant, not an employee.

What does FAST stand for in a FAST Agreement?

FAST stands for Founder Advisor Standard Template.

The Founder Institute created it to help aspiring startup entrepreneurs set up advisory boards and engage with mentors. 

The template was first released by the institute in 2011, and a new version was released in 2017.

Thousands of entrepreneurs and advisors annually use a FAST Agreement to establish productive working relationships, trading advice, and support for a standardized amount of equity.

Why should I use a FAST Agreement?

Many entrepreneurs need help when they have great business ideas and plans for their companies. But, they need guidance on taking the next steps and require an advisor.

At this stage, they cannot provide cash compensation. However, they can promise a share in the company’s equity as it grows. 

If you are in a similar situation, you can use a FAST Agreement to appoint advisors.

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;
  •  The mechanism under which the advisor will receive shares; and
  •  Independent, i.e. no employer-employee relationship
  •  Non-disclosure agreement

Why are advisors only compensated with equity?

FAST Agreements target advisors who are high-level executives with experience and the ability to provide strategic guidance and advice. Their roles are usually on the advisory board, so they are compensated with equity.

Tips on engaging with an advisor

An advisor is only valuable if you can find the right one. Here are some things to consider before engaging with an advisor.

  • Research: Do not be fixated on one advisor only. Keep an open mind and lots of options for potential advisors.
  • Meeting and introduction: Just because someone looks good on paper does not mean the result will be pleasing. The relationship formed with advisors is unlike any other. Get to know your advisors first to see if your working style and vision truly match.
  • Opportunity and compensation: Much like the point above, advisors can help you find new opportunities to grow your business. Discuss their roles and talk candidly with them about realistic compensation realistically. 

How is compensation in a FAST Agreement determined?

A company’s maturity has three levels. The first is an idea, followed by startup and growth. The level of engagement by an advisor influences the compensation they receive.

For early-stage startups, there are standard advisors. For growing companies, strategic and expert advisors will be required.

Create a FAST Agreement template with Zegal

You can use a FAST Agreement when looking for more experienced insights to take your business forward.

Having experienced professionals as advisors helps establish a productive working environment while providing valuable advice and support.

When ready, you can quickly create a FAST agreement with Zegal.

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