Question
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?
Answer
Quick answer: Yes it is possible.
Longer answer: But it's a tough sell. You see, the only people who'd work for you this early stage just for equity are people who already know you and trust you and your business.
And so if in your angel investor group you can find someone with marketing knowledge, use them to help you.
In the very short term you can make this work. BUT even in good ole U. S. of A., I fear you'll struggle to get good marketing advisors prepared to meet your terms.
This does not mean you shouldn't try; but have a plan B prepared which should be a smaller budget, longer runway tactic. I can help you develop this.
Results-based payments are 100% effective and as a part-payment they could work well for you. Downside is you need to use open-book accounting and give yourself 100% to the strategies recommended by the agency. Both you and they need skin in the game to make this remuneration work.
Go for it. But have a Plan B.
