I'm thinking of giving a Branding/Marketing firm equity over cash??

Paper_Chase

Paper_Chase

brb gym
Apr 23, 2009
1,504
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Vancouver, Canada
I'm working on a new physical product right now. I guess you could call it a health supplement.

I was looking for local branding/design/marketing firms in my area (Vancouver, BC) that I could work with.

I've done the website design and product packaging on my own. I am decent at photoshop, but it is no where near my specialty. I was hoping to work with a branding firm so they could tailor all my graphics directly to hit my target market (35-55 year old middle-upper class women).

Do you guys have an idea of how much a branding package like this would cost?

I've been thinking lately that it would be nice to give these guys shares in the company instead. This would keep them motivated to work hard, and they could handle any graphics work I would need down the line. I have plans on launching 3-4 new products under the same brand, so I think it would be worth it to have them on-board.

Anybody have experience giving a service provider equity instead of cash for payment?
 


Paper_Chase said:
Anybody have experience giving a service provider equity instead of cash for payment?
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No but generally speaking you should never give equity unless you absolutely have to. Unless they are bringing A LOT to the table and/or you can't afford their fees, you should never give equity for something like that.
 
Low end design firms cost:
3-5k for logo + branding+ business cards (maybe brand book)

mid-range:
8-10k for the above + a few extra branded items

high-end:
15-30k for less items than provided by the mid-range.



However, you have a problem giving equity away for a service such as branding. For one, equity != motivation. Secondly, your equity is not a finite resource that you are trading for a finite service.

In my experience, it's generally a bad idea to give equity to graphics people when your project is not graphics/design intensive over the long-haul. I've been able to find great designers that work with me on price or do quick work for free because I buy them a few beers and they like my projects.

You are better off giving equity to an individual/freelancer as opposed to a company. The company will be tracking their time like clockwork and will quantify exactly how much money you are loosing them.

If the branding is very important, then it may be worth giving a sliver of equity, but I wouldn't do much unless you need continuing design work.
 
if you're interested hit me up and I'll give you the info of my in-house designer that does all my product branding. I know he freelances, but not sure his prices.
 
I've been on the other end of a similar deal, I run marketing campaigns for companies.

I would NEVER work exclusively for equity. If I'm good at my job I can choose my clients, why would I work without being paid for my job when I have that option?

The deal I did was mid $x,xxx/month on retainer with an equity % after like 10 months.

When the company took off they cut me out. I could have taken legal action but didn't, wasn't worth the hassle.

I don't see why anyone who's good at their job would consider working on 100% equity, especially on a new product launch.

That deal will only attract companies hurting for clients (people who are good at marketing don't hurt for clients).

You could try to negotiate less cash upfront in exchange for equity. But if you're confident in the product, probably smarter on your end to do your homework on the agency, make sure they're solid, and pay them upfront.

You'll make more in the long run and attract better talent.

As for cost, it'll be all over the map. Think about cost in terms of ROI. If one company charges 10x more than another, there's probably a reason why, use due diligence and figure out if they're bringing the value on board to command the higher price.
 
dsiomtw said:
No but generally speaking you should never give equity unless you absolutely have to. Unless they are bringing A LOT to the table and/or you can't afford their fees, you should never give equity for something like that.
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Yes, that is a good rule of thumb and I generally do agree. However, my product is in a market where the competitors are offering the same product, but just a lower quality than my own. I really need the branding to be good to set my product apart.

Some of these branding/design experts are charging upwards of 20k for their services. If I can get them on-board for less than 10% equity I think am comfortable with that.
 
I'll probably get blasted as a commie for this, but since you're in Canada (and assuming you're a Canadian citizen), the government will give you a free $50k grant for marketing of a new business, eh? Or at least did a few years ago.

Just ask any of the marketing consultants in Vancouver, and they'll probably know about it. They'll give you the contact info of a guy at Revenue Canada, then schedule a meeting with him, and meet him at the Revenue Canada office in West Van with your business plan, have a chat, etc. As long as you meet the requirements, fill out the application, and you'll get $50k in marketing for free.

BTW... which firm you going with? I think I met them all, or at least most of them. Only one that really impressed me were those Rocket Builder guys. I think that was their name at least. Aaron was their front man / consultant.
 
Paper_Chase said:
Yes, that is a good rule of thumb and I generally do agree. However, my product is in a market where the competitors are offering the same product, but just a lower quality than my own. I really need the branding to be good to set my product apart.

Some of these branding/design experts are charging upwards of 20k for their services. If I can get them on-board for less than 10% equity I think am comfortable with that.
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I would be surprised if a company that would charge 20k+ would take equity. If you can get the work contracted and equity payout based on performance, go for it if you can keep well under 10%.
 
Kiopa_Matt said:
I'll probably get blasted as a commie for this, but since you're in Canada (and assuming you're a Canadian citizen), the government will give you a free $50k grant for marketing of a new business, eh? Or at least did a few years ago.

Just ask any of the marketing consultants in Vancouver, and they'll probably know about it. They'll give you the contact info of a guy at Revenue Canada, then schedule a meeting with him, and meet him at the Revenue Canada office in West Van with your business plan, have a chat, etc. As long as you meet the requirements, fill out the application, and you'll get $50k in marketing for free.

BTW... which firm you going with? I think I met them all, or at least most of them. Only one that really impressed me were those Rocket Builder guys. I think that was their name at least. Aaron was their front man / consultant.
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You have any more details about how to get started with something like this from Victoria? I'm working on something relatively large and hadn't even thought of grants. Is there a govt website for this?
 
If you are so anxious to give pieces of your company away, why don't you fund your design /marketing budget with money from a VC?

I'd be wary of anyone who agreed to work for straight equity.

I'm always wary of anyone who asks me to do anything for equity, because it usually indicates that they are either cash-poor, contact-poor or both.
 
IceToEskimos said:
If you are so anxious to give pieces of your company away, why don't you fund your design /marketing budget with money from a VC?

I'd be wary of anyone who agreed to work for straight equity.

I'm always wary of anyone who asks me to do anything for equity, because it usually indicates that they are either cash-poor, contact-poor or both.
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Raising money from VC is extremely difficult unless you live in SV, Boston, or NY.

One of my companies has crowdfunded 100k and talked to like 50 potential investors who "want" to invest all over the world. VC's only invest if they can pump and dump you. Your luck is with the angels but if you don't have a broad network of connections and don't live in a startup city, you will do a lot of spinning your wheels.

You are more likely to find pro bono work than raising capital.

You are right about being wary of service for equity.
 
Why are you trying to work with a marketing firm full of branders/college graduates/idiots? They don't know any more than you could find out yourself looking at the supplements on a store shelf that are geared towards your demo.

Why not hire a good designer and just pay a flat fee every time he designs a new label?

Also why would you want to give up a slice of your company when you can just hand over some cash once and be done with it?

Not trying to be a dick but the above plan is pointless.
 
blureach said:
Raising money from VC is extremely difficult unless you live in SV, Boston, or NY.

One of my companies has crowdfunded 100k and talked to like 50 potential investors who "want" to invest all over the world. VC's only invest if they can pump and dump you. Your luck is with the angels but if you don't have a broad network of connections and don't live in a startup city, you will do a lot of spinning your wheels.

You are more likely to find pro bono work than raising capital.

You are right about being wary of service for equity.
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I wasn't really suggesting OP look for VC money, but I was trying to illustrate a point.

I don't think giving up equity for anything is a good way to go unless you have no other options, and if you have no other options, you probably have more important issues than branding to deal with.

I see people try to worm their way around and come up with all kinds of creative financing involving hard money lenders and every other fucking thing under the sun before they'll consider giving up a single share.
 
Paper_Chase said:
Yes, that is a good rule of thumb and I generally do agree. However, my product is in a market where the competitors are offering the same product, but just a lower quality than my own. I really need the branding to be good to set my product apart.

Some of these branding/design experts are charging upwards of 20k for their services. If I can get them on-board for less than 10% equity I think am comfortable with that.
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Why would you give 5-10% equity for only 20k worth of services? Is it really such a tiny niche that you only see your entire business ever being worth a few hundred grand? If so I would suggest you choose another niche. :)
 
mpbiz said:
Why are you trying to work with a marketing firm full of branders/college graduates/idiots? They don't know any more than you could find out yourself looking at the supplements on a store shelf that are geared towards your demo.

Why not hire a good designer and just pay a flat fee every time he designs a new label?

Also why would you want to give up a slice of your company when you can just hand over some cash once and be done with it?

Not trying to be a dick but the above plan is pointless.
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Good questions. He may have valid reasons if branding really is important to his competitive advantages as he alluded above.

If he needs a lot of branding work and continued branding work, it may make sense to give a small piece combined with $$ for strong work.
 
IceToEskimos said:
I wasn't really suggesting OP look for VC money, but I was trying to illustrate a point.

I don't think giving up equity for anything is a good way to go unless you have no other options, and if you have no other options, you probably have more important issues than branding to deal with.

I see people try to worm their way around and come up with all kinds of creative financing involving hard money lenders and every other fucking thing under the sun before they'll consider giving up a single share.
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A friend of mine is in the whole with a hard-money guy for 300k lolol

tbh, equity doesn't mean that much unless you are a high growth company that you know you can dump after hitting certain bench-marks. Otherwise, equity is near useless if you are able to drain profits into the pockets of the workers/executives. What is more important is what terms you assign to an equity stake.
 
mpbiz said:
Why are you trying to work with a marketing firm full of branders/college graduates/idiots? They don't know any more than you could find out yourself looking at the supplements on a store shelf that are geared towards your demo.

Why not hire a good designer and just pay a flat fee every time he designs a new label?

Also why would you want to give up a slice of your company when you can just hand over some cash once and be done with it?

Not trying to be a dick but the above plan is pointless.
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You clearly know nothing about marketing/branding if you think I should just go look on the shelf at similiar products. I only have a few similiar products to compare with any way, plus why would I want to copy what everyone else is going? I want to work with a branding/marketing firm who can help me narrow down my target demographic, and ensure all the branding/design is tailored towards them.

Since when did I say I was looking at firms with college graduates and idiots working there? The firms I'm looking at have experienced people working there and have won numerous awards for their branding, marketing, tv ads and print ads.

Aren't you the same punk on my Skype who works 9-5 and can't even scrape together a few hundred for a prototype? STFU when men are talking.

blureach said:
Good questions. He may have valid reasons if branding really is important to his competitive advantages as he alluded above.

If he needs a lot of branding work and continued branding work, it may make sense to give a small piece combined with $$ for strong work.
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Yea, I'm looking to roll out 3 or 4 products under the same brand. Each product would be targeted to a slightly different subset of the main demo. Not only would they have to design labels but all the other marketing materials that go along with promoting each one.

I'm going to start talking to some local firms in the area and see what they say.

Some people in this thread keep saying to hold onto your equity, but I don't mind giving some up to partner with people that are experts in something I know I am not that good at.

Thank you everyone for your input so far!
 
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