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
I know agencies that have provided marketing services in exchange for equity.
It depends on how much the agency believes in your business. Typically, they will want a unique business with huge growth potential. Your offer of 75% equity may tempt some agencies if they like your business.
A lot of agencies won't except equity because the success of your business relies on too many external factors outside of the agencies control. Do you have the right staff? Do you have enough cash flow to give your business a fighting chance to be successful? Do your staff answer the phones? etc, etc.
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