Bringing an advisor on board can be a huge win for your business. A good advisor can open doors, pressure-test your strategy, make introductions, and help you avoid expensive mistakes.
But there’s a catch: if you don’t document the relationship properly, it can get messy fast. We see it all the time - a founder thinks “it’s just a few chats”, the advisor thinks “I’m basically part of the team”, and suddenly there are disputes about fees, equity, confidentiality, ownership of ideas, and who can contact which customers.
This guide is updated to reflect how New Zealand startups and small businesses are actually working with advisors right now - especially as more advice happens remotely, more businesses are global from day one, and IP and data protection expectations are higher than ever.
A well-drafted FAST Agreement is one of the simplest ways to set expectations early and protect your business from day one.
What Is A FAST Agreement (And When Do You Need One)?
A FAST Agreement is a short-form agreement used when you’re engaging an advisor (or sometimes a mentor or consultant) and you want clarity around what’s being provided and what the advisor gets in return.
It’s commonly used by:
- Startups working with an industry expert for introductions and strategic guidance
- Small businesses bringing on a part-time advisor while they scale
- Founders offering “advisor equity” and wanting a simple, clear vesting structure
- Businesses engaging someone senior for occasional input without hiring them as an employee
Even if your advisor is a friend, a former boss, or “someone who’s just helping out”, it’s still worth documenting. In fact, those informal arrangements are often the ones that blow up later because everyone assumed something different.
Advisor vs Employee vs Contractor: Why The Labels Matter
It’s normal to use words like “advisor”, “consultant”, “contractor”, or even “team member” interchangeably - but legally, the nature of the relationship matters.
For example:
- If someone is effectively working in your business under direction, with set hours and ongoing duties, they may look more like an employee (which triggers employment obligations and risk).
- If they’re providing services independently for a fee, they’re usually a contractor, and you may need a proper services arrangement.
- If they’re genuinely advising (high-level guidance, introductions, occasional meetings), a FAST Agreement can be a practical fit.
If you’re not sure which bucket your arrangement falls into, getting advice early can save you a lot of pain later - especially before you start paying, granting equity, or giving system access.
Why Advisors Can Create Legal Risk (Even When Everyone Has Good Intentions)
Most advisor disputes don’t happen because anyone set out to cause problems. They happen because expectations weren’t made clear at the start.
Common risk areas include:
Advisors often want deep context to give useful advice - financials, pricing, customer problems, supplier details, product roadmaps, and growth plans.
That’s fine, but you should be clear on:
- what information is confidential
- how it can be used (and not used)
- how it must be stored and protected
- whether the advisor can share it with their network (even “to help you”)
This is especially important if the advisor is also active in your industry, advising other companies, investing, or working in a role where conflicts could arise. In some cases, you may want a standalone Non-Disclosure Agreement as well - but often, confidentiality is handled within the FAST Agreement itself.
2) Ownership Of Ideas, Documents, And IP
Here’s a scenario we see a lot: an advisor helps refine your pitch deck, suggests a product feature, drafts an email campaign, or outlines a go-to-market plan. Later, someone asks, “Who owns that?”
Under New Zealand law, ownership can become unclear if you don’t document it - especially where the advisor creates materials or makes meaningful contributions.
Your agreement should make it clear whether:
- anything created by the advisor is assigned to your business
- the advisor is granting you a licence to use their pre-existing materials
- your business can keep using deliverables after the relationship ends
This matters even more when you’re raising capital or selling the business - because investors and buyers often ask about IP chain-of-title (in plain language: whether the business truly owns what it says it owns).
3) Equity Promises And “Advisor Shares” Without Guardrails
Equity is a common way to reward advisors - particularly early-stage startups that are cash-tight.
The problem is that equity arrangements can become risky when they’re vague. “We’ll give you 1%” can mean very different things depending on whether it’s:
- 1% of the company today vs after future investment rounds
- subject to vesting (earned over time) vs immediately issued
- ordinary shares vs an option vs another instrument
- linked to specific milestones or continued involvement
It’s also important to ensure the arrangement fits with your company structure and any shareholder rules you already have in place (or should have in place). If you’re issuing equity, you may need supporting documents like a Shareholders Agreement and governance documents such as a Company Constitution.
4) Conflicts Of Interest (And Competing Businesses)
A good advisor is usually well-connected - and often involved in multiple businesses. That’s not a bad thing. But it does mean you should deal with conflicts early.
For example, your advisor might:
- advise a competitor (now or in the future)
- invest in a business that competes with you
- work for a company that could benefit from your confidential insights
A FAST Agreement can include clear conflict management expectations - like disclosure obligations and restrictions on using your information for other projects.
What Should A FAST Agreement Cover?
A FAST Agreement is designed to be practical and lightweight - but it still needs to cover the “big ticket” issues clearly.
While every arrangement is different, a well-drafted FAST Agreement will usually address the following.
Scope Of Advice And Expectations
This is the part that prevents misunderstandings.
You’ll usually want to define:
- what the advisor will actually do (e.g. monthly calls, introductions, review strategy)
- what they won’t do (e.g. operational tasks, representing the company to third parties without approval)
- time commitment expectations (even if it’s flexible)
- how you’ll communicate (email, Slack, scheduled meetings)
This is also where you can clarify whether they’re allowed to hold themselves out as part of your business (for example, on LinkedIn) and what title they can use.
Fees, Equity, Or Other Reward
Your agreement should clearly state what the advisor receives, such as:
- a fixed fee
- an hourly rate
- equity (often subject to vesting)
- a mixture of cash and equity
If equity is involved, you’ll want to get very clear on mechanics. In practice, this often links to a separate Share Vesting Agreement (or an option arrangement) so the business doesn’t end up “stuck” with someone on the cap table who is no longer contributing.
Confidentiality And Privacy
Confidentiality is usually central to an advisor relationship, because you can’t get meaningful advice without sharing meaningful information.
If your advisor will handle personal information (for example, customer contact details, employee details, or even investor lists), you also need to think about your obligations under the Privacy Act 2020 - including taking reasonable steps to keep personal information secure and only using it for appropriate purposes.
In many cases, it’s also a good time to check you have the right public-facing documents in place, like a Privacy Policy, especially if your business collects information online.
IP And Deliverables
Even if you don’t expect your advisor to “make” anything, it’s still smart to cover:
- who owns anything created during the advisory relationship
- how pre-existing materials are handled
- what happens to documents, notes, and recordings after the relationship ends
This is particularly important if you’re building software, content, brand assets, training resources, or anything that you’ll rely on long-term.
Term, Termination, And What Happens Next
A good FAST Agreement should make it easy to end the relationship cleanly.
Common options include:
- a fixed term (e.g. 3 months, 6 months, 12 months)
- an ongoing arrangement that either party can end with notice
Termination terms are where you deal with practical questions like:
- Does equity stop vesting immediately?
- What happens to unpaid fees?
- Does the advisor need to return confidential information?
- Can the business continue using deliverables?
Having these points written down helps you avoid awkward conversations later - and it also shows you’re running a professional operation.
How To Set Up An Advisor Relationship The Right Way (Step-By-Step)
If you’re about to work with an advisor, you don’t need to overcomplicate things - but you do want to be intentional.
1) Decide What You Actually Need From The Advisor
Start with clarity. Ask yourself:
- Are you looking for strategic guidance, introductions, or technical expertise?
- Do you need someone hands-on, or just periodic input?
- Are you expecting deliverables, or just advice?
This helps you avoid paying (or giving away equity) for vague “support” that’s hard to measure.
2) Agree On Compensation Early (And Keep It Commercial)
It’s tempting to keep things casual, especially if the advisor is doing you a favour.
But if money or equity is involved, you’ll want to be clear on:
- how much they’re getting
- when they’re getting it
- what they need to do to earn it
- what happens if things don’t work out
Putting this in writing is not “unfriendly” - it’s how you protect the relationship as much as the business.
Practically, many founders do the first call informally, then decide whether to proceed.
That’s fine. But once you’re moving into real sharing - revenue numbers, investor lists, customer data, product plans - you should get the agreement signed.
If the advisor is going to be given access to systems (e.g. Google Drive, CRM, Slack, Notion), you should also think about internal policies and access controls, so information is shared on a “need to know” basis.
4) Make Sure You’re Not Accidentally Creating An Employment Relationship
This is one of the most overlooked risks.
If the advisor starts working regular hours, taking instructions like an employee, managing staff, or doing ongoing operational work, the relationship may start to look like employment - regardless of what you call it.
If what you really need is someone doing work in the business, it may be more appropriate to use an employment or contractor arrangement, such as an Employment Contract or a tailored contractor agreement.
Getting this classification right matters because the obligations (and risks) are very different.
5) Keep A Simple Paper Trail
You don’t need to turn every call into a formal meeting - but keeping a light paper trail can help, such as:
- confirming in email what was agreed after key discussions
- tracking key introductions made
- noting agreed milestones if equity or success fees are involved
This is useful if there’s ever a dispute, but it’s also helpful operationally because it keeps everyone aligned.
Common Mistakes To Avoid With Advisor Agreements
When you’re moving quickly, it’s easy to gloss over the legal side. These are the mistakes we’d encourage you to avoid.
Relying On A Generic Template
Templates can be a starting point, but advisor arrangements are often more nuanced than people expect - especially when equity, IP, confidentiality, and conflicts are involved.
If your agreement doesn’t match how the relationship works in real life, it may not protect you properly when you need it most.
Issuing Equity Too Early (Or Without Vesting)
If you issue shares upfront and the advisor disappears after a month, you’ve created a long-term ownership issue for a short-term contribution.
Vesting is one of the simplest tools to align incentives and keep things fair for everyone.
Being Vague About Introductions And Outcomes
Some advisor roles are primarily about connections. That can be valuable, but it can also be hard to measure.
If your reward is tied to “introductions” or “helping raise capital”, make sure you define what counts:
- Does an intro only count if it turns into a meeting?
- Does it count if it turns into a deal?
- What if the business already knew the person?
Clarity upfront saves uncomfortable conversations later.
Not Thinking About Privacy And Data Handling
If your advisor is going to access customer data, mailing lists, or analytics dashboards, you should treat that seriously.
Even if your advisor is completely trustworthy, your business still needs to take reasonable steps to protect personal information and limit use and access. This is both good practice and part of meeting expectations under the Privacy Act 2020.
Key Takeaways
- A FAST Agreement is a practical way to document an advisor relationship and set expectations clearly from the start.
- Advisor arrangements commonly create risk around confidentiality, ownership of IP, conflicts of interest, and unclear compensation (especially equity).
- If equity is involved, it’s important to document vesting and exit outcomes so your cap table stays clean and fair as your business grows.
- If your advisor starts doing regular operational work under your direction, the arrangement may look more like employment or contracting, and you may need a different legal setup.
- Strong legal foundations early on can prevent disputes later and make fundraising, growth, and even a future sale much smoother.
If you’d like help putting a FAST Agreement in place (or you want to sanity-check an advisor equity offer before you make it), you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.
