When you start your new company, you’ll likely want to build a board of directors to raise capital in order to have good people involved in your company. Most people don’t want to be involved in a start-up as a board of directors member because there is liability between the board member and the shareholders. Rather, for a startup, we create a board of advisors. Advisors have no voting rights. They can sit on the “board of advisors” and they can get some stock for it. Usually, we give them a quarter or a half percent of the stock, vesting over 12-18 months. This is all just for being around to ask a question for their expertise. Plus, you get to use their resume as one of the resumes presented to your potential investors or strategic partners. You want to be very smart in building this board of advisors. At some point, if they are more involved, you can give them more stock, and/or you can put them on your board of directors and get directors and officers liability insurance.
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