When To Use a FAST Agreement
The preparation of contracts does not have to be nerve-wracking any longer. With DoNotPay’s guidance, you will get lots of valuable tips about different legal documents and agreements. While this article provides information on a FAST agreement, you can browse through our website to find the specifics of other types of documentation necessary for your business operations.
What Is a FAST Agreement?
A FAST agreement was first created by the Founder Institute to help startups:
- Establish advisory boards
- Engage with advisors and mentors
The FAST part in the name of this agreement stands for Founder Advisor Standard Template.
Entrepreneurs and advisors use this agreement to:
- Establish their working relationships
- Trade support and expert advice for a certain amount of equity—under a FAST agreement, an advisor commonly receives the company’s shares in the future for the services he or she offers
An advisor who signs a FAST agreement is not an employee of the company but acts as an independent consultant.
Hire Advisors, Consultants, or Mentors
To understand the difference between advisors, consults, and mentors, you can take a look at the following table:
| Advisors | Consultants | Mentors |
| While consultants have a similar role as advisors, they are:
| Mentors:
|
Why Use a FAST Agreement
While a lot of entrepreneurs may have great business ideas and solid plans, they:
- Need guidance on different aspects and operations
- Cannot provide cash compensation for the necessary expert advice
In this case, entrepreneurs can introduce advisors by offering them a share in their company’s equity:
- As the company grows
- Based on the advisors’ performance
To engage an expert to take on an advisory role in your business, you should use a FAST agreement. However, you should offer this person an employment agreement if he or she will
- Provide essential input to your operations
- Perform an executive function—if this individual is appointed as a director, you can also use a director’s service contract
A Guide to Engaging an Advisor
The following table outlines common steps you—as an entrepreneur—should take to engage advisors:
| Step To Take | Tips |
| Do research | You should try to identify several suitable advisors who can contribute to your business’s success and growth. For this purpose, you can use:
|
| Get in touch with an advisor | To contact the advisors you find interesting, you can use the contact details you find on their:
|
| Organize a meeting | You should arrange a meeting to discuss potential cooperation |
| Make a request | If you believe the advisor can contribute to your business operations and projects, you can suggest testing out your working relationship |
| Present an opportunity | You should present a more formal business offer to the advisor if the previous testing stage is successful |
| Create a FAST agreement | If advisors agree to your offer, you should prepare and send them a FAST agreement |
FAST Agreement Key Parts
A FAST agreement should include some of the following:
- Services—this section needs to outline what you expect to receive from the advisor, i.e., to provide expert assistance and advice to your company
- Compensation—type and amount of shares that the advisor will receive together with:
- Vesting schedule
- The mechanism under which the advisor will receive these shares
- Expenses—an advisor is entitled to reimbursement of any work-related expenses, e.g., travel costs incurred when performing the agreed tasks
- Terms and termination—this part of the agreement needs to specify how long the defined terms will continue (usually until one contractual party terminates the contract)
- Independent contractor—the agreement needs to specify the advisor’s relationship with the organization, i.e., that he or she is not an employee
- Non-disclosure—this part is related to the use, definition, and disclosure of confidential information
- No rights guaranteed—you should specify that an advisor does not get rights under the company’s intellectual property, copyright, patents, and confidential information
- Assignment of intellectual property—this section further explains that an advisor must assign all rights and interest to any new concepts or inventions he or she has created for the company under the contract
The agreement ends with the:
- Effective date
- Governing law
- Names, addresses, and signatures of both parties
How To Create a FAST Agreement
You can hire a lawyer to create this or any other contract for you. If you would like to save some funds, you could also access the Financial Institute’s FAST agreement template and modify it to meet your specific needs.
How To Prepare Legal Documents
As you must have certain legal documents and contracts to run your business successfully and secure your projects, you can use:
- Legal assistance—you should be prepared to pay a hefty sum for the services a lawyer will provide
- Online templates—make sure you do thorough research and comparison before you choose the one you will use as a basis for your company’s formal documents
- DoNotPay’s Standardized Legal Documents product— to get help with the preparation of numerous documents and agreements
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