Equity for Graphic Design?
Some of my best advisers say trade some equity for design - others say no way.
What are your thoughts and experiences?
I would not trade equity for design work. Unless this person will actually become a part of your team and create enough value to warrant equity. Otherwise it is short sighted to trade equity for something you need very early on just to launch. I'm sure your design/brand will evolve over time and this person will have put in a minor amount of work compared to what it will take to launch and continue a successful company. Additionally, you may be putting too much weight on your brand and not enough on what you're actually selling? However it is hard to give a more detailed answer without knowing what exactly you are doing and how detailed and ongoing the design work is. I would love to help answer your question, but need a little more detail on what exactly it is you do and what type of design/branding work you need.
The following is my personal opinion, and you'll get a 100 different answers to this question if you ask 100 people. Equity for work is both complicated and expensive.
1) You need to know how to value the company in order to provide an incentive to the graphic designer, they need to see the value and they need to understand how to turn the equity into cash at a later date. Liquidity is very difficult with most small businesses. All of these factors are very complicated.
2) Providing a percentage of your firm is very expensive both in terms of long term value and maintaining the individuals as shareholders. You'll need to keep them updates at all major business milestones and they can cause headaches at a later date as the business grows.
If you don't know a lot about equity and what your getting into, then don't do it... if you know exactly what you are doing and so does your contractor then give it a shot but most experienced business folk would avoid it. They'd prefer a (long term) business partner (they might be doing graphics/head of marketing) who can help grow the venture and will stay around long enough to maintain institutional knowledge.
Equity should be preserved for something of real value that cannot be achieved otherwise. Equity for a design partner - yes. Equity for a design deliverable - No. The benefit of equity is that the person receiving it becomes invested in the success of the business and will continue to work to help it grow. A graphic design is static - once its delivered the value exchange is complete.
I won't trade equity for graphic design.
Design is important. In fact, a good design can make a world of difference, however, unless you are literally selling design, I won't part with equity for it.
End of the day, having a good design is like having vitamins. It keeps you healthy, makes you feel good - and that might be a differentiator for some.
But, I would trade equity for a painkiller. Something that solves a real pain point. It could be engineering, sales etc.
I would say no. Giving equity means you give a part of your company to someone. Hence, you give a little bit of control of your company to someone.
If it were me, I'd give equity only to people whose engagement is vital to the future of my company. Namely, people I want to see in my company for the long term (i.e. use equity as a retention measure) and whose contributions are key to the well-being and functioning of my company (aka, not for people who can be easily replaced or whose job can be easily given to someone else).
If cash for payment is a problem, I suggest you find other ways to finance your design work. Call me if you need some ideas for that.
I wish you much success and fun developing your brand!