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?

Possible, yes. Good idea, probably not. This is not a solid growth plan over the long run and the road to shared equity is wrought with tons of problems. Having been on both sides of the equity equation and having had both failure and success from equity arrangements, you need to be very very deliberate and decisive about your approach. On another note, your % is way off base, so much so that it would scare away the best-in-class partners while attracting the losers.


Answered 3 years ago

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