Board building6 min read
Non-executive director, adviser or fractional executive?
Three different roles, three different levels of duty and cost. The test is whether you need oversight, advice, or someone to do the work.
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Key points
- Non-executive director: filed at Companies House, owes duties under section 172, personally liable, needs D&O cover. Median equity for an independent board member at seed is around 0.78%.
- Adviser: a contract, no filing, no fiduciary duty, minimal exposure. Carta's median grant at seed is 0.12%.
- Fractional executive: does the job. Paid a day rate, sits in the management team rather than on the board.
- A director on adviser terms will disengage; an adviser on board-level equity will sit on your cap table for years.
- The fourth option most founders miss is a director who subscribes at the round price alongside the appointment.
Which do you need: a non-executive director, an adviser or a fractional executive?
It depends on whether you need someone to hold you to account, to give you an opinion, or to do the work. A non-executive director provides oversight and carries statutory duties. An adviser gives guidance with almost no exposure. A fractional executive runs a function part-time.
They are not interchangeable, and appointing the wrong one is the commonest board-building mistake at seed stage.
| Adviser | Non-executive director | Fractional executive | |
|---|---|---|---|
| What they do | Give opinions, make introductions | Oversee, challenge, hold to account | Run a function part-time |
| Where they sit | Outside the company | On the board | In the management team |
| Filed at Companies House | No | Yes | No |
| Duty under section 172 | No | Yes | No |
| Personal liability | Minimal | Full director duties | Employment or contractor terms |
| Needs D&O cover | No | Yes | No |
| Typical time | 1–4 hours a month | 1–2 days a month | 2–8 days a month |
| Typical pay | Equity only, or a small fee | £10,000–£30,000 plus equity | Day rate, varies widely by function |
| Typical equity at seed | ~0.12% median | ~0.78% median for an independent | Negotiated, often options |
| Ending it | Terminate the agreement | Board removal process | Notice period |
Three questions that decide it
Do you need someone who can say no to you? If yes, you need a director. Only a board member has the standing and the duty to block a decision. An adviser can disagree; a director can vote. If your real problem is that nobody in the company or on the cap table will challenge the chief executive, an adviser will not fix it.
Do you need capability or capacity? Capability — knowing how to do something — can come from a director or an adviser. Capacity — someone to actually do it — needs a fractional executive. Founders routinely appoint a non-executive hoping for capacity and get capability, then feel short-changed. The director has not underdelivered; the brief was wrong.
Would your investors expect this person on the board? If a lead investor is asking for governance, an adviser will not satisfy them. What they are asking for is independence on the board, and independence has a working meaning here.
What each one costs
An adviser is usually equity only. Carta's H1 2024 medians put adviser grants at 0.21% at pre-seed, 0.12% at seed and 0.05% at Series A. The FAST Agreement framework runs up to 1% for an expert adviser at idea stage, but only around 10% of pre-seed advisers receive 1% or more. Cap the total adviser pool at around 5%; the median startup allocates 2% to 4% by Series A.
A non-executive director costs £10,000 to £20,000 a year plus equity at early-stage technology scale, £5,000 to £30,000 at SME scale, and £30,000 to £70,000 and above for private-equity-backed companies. Median equity for an independent board member at seed is around 0.78%.
A fractional executive is paid a day rate, which varies widely by function and seniority and is sometimes topped up with options. This is the only one of the three you can scale up and down month to month.
What is the fourth option?
A non-executive director who invests alongside the appointment. Rather than granting equity as compensation, you offer the seat and they subscribe at the round price with their own money.
Governance guidance is more comfortable with this than with paying a non-executive in options: the UK Corporate Governance Code provides that non-executive remuneration should not include share options or other performance-related elements, while nothing prevents a director buying shares.
It changes the dynamic in three ways. The director has downside as well as upside. Your cap table gains an investor rather than losing equity to a grant. And the appointment becomes a funding signal at the next round.
Across our network, investing directors commit an average of £32,700, with tickets typically running £25,000 to £100,000 at seed and £100,000 to £500,000 at Series A.
Three mistakes to avoid
Giving a director adviser-level equity. A candidate asked to carry fiduciary duty, personal liability and a Companies House filing for 0.15% will either decline or disengage within a year. The 0.78% median exists for a reason.
Giving an adviser board-level equity. Roughly half of advisers stop contributing before the Series A that dilutes them. Two-year monthly vesting with a short cliff is the protection, and it is standard.
Calling a fractional executive a non-executive director. It happens for status reasons and it creates a genuine problem: a person cannot credibly oversee work they are doing.
Where to go next
If you have decided you need a director, when to appoint your first independent director covers the six signals and what to have ready. For the role itself, see what a non-executive director does at a seed-stage company.
Common questions
What is the difference between a non-executive director and an adviser?
A non-executive director is appointed to the board, filed at Companies House, and carries the full statutory duties of a director including the duty under section 172 of the Companies Act 2006. An adviser has a contract, no filing, no fiduciary duty and almost no personal exposure. An adviser can disagree with you; a director can vote against you.
What is a fractional executive?
Someone who runs a function part-time — finance, marketing, technology — as a member of the management team rather than the board. They are paid a day rate, they can be scaled up and down month to month, and they are not independent of the work they are doing.
How much equity should an adviser get compared with a board member?
Carta's H1 2024 medians put adviser grants at 0.21% at pre-seed, 0.12% at seed and 0.05% at Series A. Median equity for an independent board member at seed is around 0.78% — roughly six times, because of the duties, the liability and the filing.
Can a fractional executive also be a non-executive director?
Not credibly. A person cannot oversee work they are doing: if they run your marketing, they cannot be the independent voice assessing marketing performance. The title is sometimes used for status reasons and it creates a real governance problem.
Sources
- Carta, State of Startup Compensation H1 2024 — adviser equity medians (US data)
- Founder Institute, FAST Agreement (Founder/Advisor Standard Template)
- Companies Act 2006, section 172 — duty to promote the success of the company
- UK Corporate Governance Code, Financial Reporting Council
- Board Appointments, UK non-executive director remuneration — fee ranges by company type
- InvestingDirectors network data, September 2026 (InvestingDirectors network data)
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