However, there are times when your startup shouldn’t pay equity
Trust between a startup and its marketing firm is essential to developing a successful relationship. Any potential partner must be vetted like a potential employee; if the trust isn’t there, walk away.A few telltale signs of an untrustworthy agency include infrequent correspondence, incomplete communications and a tendency to point out possible problems but not offer solutions include an earn-out in the contract — don’t hand over equity until the marketing firm has shown some results.
Getting carried away is easy to do, but don’t think about marketing until the product is ready to go. Forty-two percent of startups that fail do so because there’s no market need for their product. The ducks all need to be lined up with a product in place before a partner is brought on, or everybody loses.
Startups shouldn’t offer equity to marketing firms that don’t fit their culture. Don’t throw around equity like Monopoly money. Month-to-month contracts offer a great alternative to marketing initiatives that demand deeper pockets, and they allow startups to evaluate potential partners.
Do your homework on potential partners: Study their company websites, talk to other clients and find out about their core values. Remember that playing nice doesn’t always mean sharing. If they don’t fit, don’t partner.