Questions

We are a startup that is in the process of manufacturing and distributing Nutricosmetics to the US market. Based on our pilot project, we understand that marketing, especially digital marketing, is key to growth in this highly competitive category. To conserve cash, we are thinking about hiring a marketing agency with experience in the beauty or skincare and offer 75% in equity and rest in cash based on results. Are we being realistic? Are there marketing agencies who will accept equity as payment? From the startup perspective, is this a good idea in the long run?

Hello! This is a very good question, my name is Humberto Valle, and I'm the founder of www.Unthink.me a small globally known inbound marketing agency. We have helped many tech-related companies such as Software Developers who work on equity as well as traditional payments. For our marketing agency, we have also taken equity in combination of 'cash' payment.

So yes, there are many opportunities for startups to hire or partner with an individual or agency on equity. The trick, I would assume is where in your lifecycle do you approach someone to work with you/for you for equity promise?
At the end of the day, marketing agencies are not a hail mary approach to growing or making a company sustainable - its all about management and strategic market fits - if your plan is to hire an agency to have them do what you want, you may not find anyone who would be interested, possibly not even for payment.

It is very understandable that you want to save your burn rate but you have to be respectful of someone's skillset - for example you mentioned doing 75% equity and the rest based on results - so commission? A good established marketing agency is not in the business of a startup, so unless they have a CEO who gets distracted, any good leader will not take on 'external opportunities' from what they are doing right now - aka a marketing agency won't work on hopes and dreams - which is what this is right now. As a business owner, startup entrepreneur and leder of your team you have to make critical decisions and hiring and spending on marketing is one of them.

For example, I would consider myself to be globally recognized ( not a lot but decently enough) on topics that revolve around marketing strategies - my suggestion to you would be to look into marketing agencies and hire them directly while you are also focusing your expertise (is it manufacturing? logistics? sales? what is it? focus on that and outsource/partner the rest such as for example you could look for an existing expert in cosmetic distribution or connections at some of the larger retailers, give them that structure (% equity + commission %) butkeep that that equity to a minimum (don't offer, ask for them to value their own worth and negotiate from there)


Answered 2 years ago

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