Apicus · chapter no. 04
Two groups of outsiders end up around your table: advisors, who have influence but no power, and directors, who have legal power over the company, including over you. Founders routinely overpay the first group and under-think the second. This chapter is the math and the norms for both.
No. 01 · Influence without power
A good advisor compresses years of learning into a phone call: intros that get answered, pattern-matching from having seen your movie before, and credibility borrowed until you've earned your own. None of that requires giving away meaningful equity and none of it belongs on a handshake.
| Company stage | Standard advisor | Strategic advisor | Expert advisor |
|---|---|---|---|
| Idea stage | 0.25% | 0.50% | 1.00% |
| Startup stage | 0.20% | 0.40% | 0.80% |
| Growth stage | 0.15% | 0.30% | 0.60% |
Levels from the Founder Institute's FAST agreement, the standard template at fi.co/fast. Grants vest monthly over ~2 years with a short cliff, as options, with a defined role. An advisor asking for 2%+, cash retainers, or board representation is asking for something other than an advisory role.
No. 02 · Power, defined
The board is not a mentorship circle. It is the legal governing body of the corporation, elected by shareholders, owing fiduciary duties of care and loyalty to all of them. Advisors advise you; the board employs you.
No. 03 · Seat by seat
Boards grow one financing at a time and seats granted early are nearly impossible to claw back. The common patterns:
Founders only. Keep it formal anyway: real board consents, real minutes. The habits matter before the stakes do.
Many seed rounds take no seat at all; guard that where you can. If a lead insists, one investor seat on a three-seat board is the norm. Observers (common for corporate venture investors) attend without voting.
Two founders, two investors, one independent: the 2-2-1. A leaner 2-1 (two founders, one lead) is common and founder-friendlier; take it when offered.
Later rounds add investor seats; healthy companies balance them with independents who bring operating experience, not just capital.
No. 04 · The math that matters
Count the seats by allegiance, not by name. When founder seats and investor seats split evenly, every contested vote, including whether you keep your job, is decided by the independent director. That's why "the independent" is the most negotiated seat in venture: insist it be chosen jointly and never let it default to someone from an investor's roster.
Protective provisions in the charter give preferred shareholders veto rights over big decisions (new financings, a sale, new senior stock) regardless of board math. Controlling the board while forgetting the charter is winning half the game. Details live in the priced-round stack ↗.
An observer seat grants attendance and information without a vote. It's the standard compromise for strategic investors and smaller funds and usually the right counter when a seed investor asks for a full seat. Paper observers with confidentiality obligations and the right to exclude them from privileged or sensitive sessions.
Board seats and protective provisions sit on top of plain shareholder voting power: charter amendments, director elections, and sale approvals ultimately count shares by class. Track who holds what as the classes stack; dual-class common exists precisely to keep this layer with founders.
Who elects which seat is fixed in the voting agreement at each round: common elects founder seats, preferred elects investor seats, and everyone together (usually) elects independents. Read it before you sign it; it is the constitution of your board.
No. 05 · Running it well
Even-numbered boards deadlock; deadlocks favor whoever benefits from nothing happening. Five beats seven; three beats five until the company is real.
Call founders from their portfolio, including the failed companies. You can fire an executive; removing a director is somewhere between painful and impossible.
Bad news travels before the meeting, one call at a time. The meeting is for decisions, not reveals; a surprised board is a board that stops trusting you.
D&O insurance and indemnification agreements for every director, from the first outside seat. Serious independents will ask; the good ones walk if the answer is no. The indemnification agreement is the company's personal promise to each director; D&O is the insurance that funds the promise. Directors want both because a promise without funding dies with the company.
An agenda, a deck sent 48 hours ahead, minutes, and consents for everything that needs one. Six to eight meetings a year early on. Sloppy governance surfaces in diligence at the worst possible price. As investor seats arrive, stand up audit and compensation committees; directors approving their own option grants is the classic conflict.
Further reading
The standard advisor template with the equity matrix above, free at fi.co/fast ↗.
The model document where board composition is actually set, within the model legal documents at nvca.org ↗.
The standard book-length treatment of venture-backed board mechanics, meeting cadence, and director management.
Free essays on board management and investor relations at ycombinator.com/library ↗.
Investors fund machines, not survival. Unit economics, the use-of-funds story, and the readiness check.
SOC 2, ISO 27001, and the timing call between certification, product, and sales.