Cofounder · Marketing

How much equity do marketing partners take?

Poongundran Balakrishnan Founder of noyyal logistics

May 2nd, 2018

I have a business idea. And while I discussing about it with one of my friend, he liked my idea and told me that he would take care marketing, branding and all the expenses related to it. And asked me 30 - 40% stakes of the company. Is this % okay. How do you see this in the long run?

Scott Taylor Sales & Marketing Director at Cloudia Assistant / Author: The Opportunity in Every Problem

May 2nd, 2018

I once asked a group of small business people: "If I could put one million dollars in your pocket at the end of this year, would you pay me the remaining ten million?" Most deliberated over this for some time but came to the conclusion that they would be one million dollars richer than they are today and would accept the offer. However, a few said that's not fair, it's their business, their idea so they should make the most money. To them I said, "Then you should be content with what you're making today and expect nothing more because you are making as much as your efforts can pay.

It's not just about a percentage but what they bring to the table. You need measurable KPIs, contacts, expertise, speed and other values you should consider. An idea that can't be sold is no better than not having an idea in the first place. Also remember, if you sold an idea to a company you would receive from 3% to 6% royalties and that's it. The idea is worthless without the proper team to make it sell off the shelves.

Mr. Kelly Johnson Looking for Co-founder

May 8th, 2018

I personally would turn him down under the circumstances you describe. If your friend was a full blown Co-founder, then that sounds reasonable assuming you have no other Co-founders. But that is not what it sounded like in your posting. What do you have left in equity to split between you and another Co-founder? Could he realistically gain equity control of your entire company? No, I would never give 30-40% of my company to a single aspect of a startups many needs.

He would cover "All the expenses"? That could get expensive, is he saying he has VC money to back that? Or is he hamstringing your potential to what he can afford to spend.

Dane Madsen Organizational and Operational Strategy Consultant

May 2nd, 2018

An idea is not valuable without team, technology, and traction. Assuming you can get a team and the technology pulled together, traction is critical. A high-performing marketing person should be involved before you write a single line of code to validate product/market fit and user interest. The high-failure rate of startups directly correlates to bad marketing (or no marketing) strategy. Marketing is not advertising, branding, or collateral; it is the core strategy that drives the product. Your friend may be the best for the role, and if so, the 30% is not out of order if all you have is an "idea", but this makes him more a cofounder.

Tariq Syed Business Consultant at Innovation 360 | Product Owner Innovation Accelerator Center | Lead at TURN8 & IBTIKARI

May 2nd, 2018

Depends on how much of marketing and branding effort is required for your idea and how much you need him at the long run. I would suggest you go for a vested equity where in you provide like 5% equity but it will take five years to get that 5% just an example. The other way to look at it is if he is willing to put money into the company then yes you can go ahead and give him not more than 15%

Aditya Sanghvi Impact

May 2nd, 2018

you must go with some fix pay 30 -40 % is too high even in short term

Tyrone Havnar CEO/FOUNDER

May 2nd, 2018

In my own view there are factors to look at. I think thats a little too high atleast look at 15% perhaps. How does he take that. There are pros and cons in all we do,you need not risk losing out. And remember every investor is a business man/woman,there is always a gain aimed at. The gain should not affect you in a long run.

Mario Rubios nice person, web developer, i love dogs and beach

May 2nd, 2018

of course that make sense, only if he assures good profit. i.e 2 million in one or 2 year... after that year he can vest its 40%

Travis Staut Marketer, Leader, Problem Solver & Growth Hacker

May 10th, 2018

You should quantify how much marketing expense would be covered, otherwise there's no way to associate a value to the deal. If he's going to spend $500K on marketing, that's one thing. If he was thinking $10K, that's a whole other ballgame.

James Miller Looking for a PHP software developer ideally based the North East UK.

May 2nd, 2018

Firstly it’s the team that makes the business successful not one individual. Granted each partner has a unique skill set, but each should be awarded equity based on their experience, capacity and contribution to the progress and evolution of the business. Just because one person is an ‘expert’ or has ‘x number of years experience’, does not necessarily grant them higher equity. What’s important is what they invest into the business in terms of development and building it. An excellent book on this subject is: Slicing Pie Handbook: Perfectly Fair Equity Splits for Bootstrapped Startups

Marina Beraz HoneyBadger

May 3rd, 2018

I recommend you do the Founder Institute program (