Well, there is no standard on this one. But often the number ranges between 0.25% to 1%, usually depending on the level of involvement, the value that the person brings to the startup, etc.
The important point is NOT to make it transaction and to keep it as an honorarium. This ensures that the engagement is for the right reasons i.e. because the person like you and is excited about what you are doing. And because the aspiration should be to build a large company, if you are super-successful, even a 0.25% equity will offer substantial upside to an investor.
Some things to consider when distributing equity to advisory board members:
- Provide a vesting clause i.e. the equity should vest – i.e. be due – after a period of 6 months. This allows both – the startup as well as the advisor – to test the relationship and see if they are both enjoying the interactions and are seeing value in continuing the relationship.
- Treat all advisory board members as equals. Even if someone is more senior or accomplished than others, as your advisory board member, they are equals.