Own the culture. I’m sure people are finally seeing the culture shifting from consumers to owners. “PAY ME IN EQUITY” is becoming the new motto. Here are things to consider when getting “paid in equity”
1) Structure: usually celebrities get restricted stock that vests over time. The value should be the market rate for their services. So if you get paid $1M for something, then get $1M in today’s value of the company stock. Don’t be fooled by the “this will be worth $1m in 5-10 years” deal.
2) Stock options are not the same as stock grants. You still have to buy the stock with options. The key is the strike price. If the stock is worth $15/share and your grant is $14/share then you are only getting a $1 discount and have to purchase shares. You have the right to purchase them.
3) Later stage companies typically do cash and stock. Growth stage companies prefer stock. Early stage only has stock to offer. But the early stage is the riskiest so you have to have balance and diversification.
4) How do you know how much your stock is worth? Price per share of the last round they raised. 409A analysis. Waterfall analysis. Preferred shares are typically worth more than common.
5) How do you make money when getting paid in equity? You’re betting that the value of the company will continue to increase, and your stock will be worth more than just holding it in cash or you investing it yourself.
Help these celebrities make better partnerships, and they will defer cash for more equity in deals so more founders AND celebrities can win together. What other celebrities got paid in equity that y’all like? Who needs a celeb partnership and has the equity to pay them with?!