advisory shares meaning

Advisory shares are equity compensation granted to advisors of a company, typically in startups, in exchange for their strategic guidance, expertise, or industry connections. Unlike regular stock options, advisory shares often come with a vesting schedule and do not require monetary investment. They help attract experienced professionals who can contribute to a company’s growth without being full-time employees. Startups commonly issue advisory shares to mentors, consultants, or industry experts who provide valuable insights in areas like fundraising, business development, or marketing. These shares align the advisor’s interests with the company's success, as their value increases with the company’s growth. Advisory shares are usually structured as stock options or restricted stock units (RSUs), with clear terms outlined in an advisory agreement. For startups, offering advisory shares is a cost-effective way to gain high-level expertise, while for advisors, it provides potential financial upside if the company succeeds.