Should Influencers Choose Equity or Cash?

Talent Management is a lot less about being a talent manager, but a tool of having access to everything else and build much bigger things than just management companies.

Sure, these models generate a lot of cash allowing you to make radical pivots.

But really smart founders use this (eventually) as an access point to build much bigger service companies in other verticals or go beyond that.

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They see it as a means to an end to build their bigger long term projects.

There is a lot to be done with new age management companies with the leverage they build over time with creators, but what fascinates me more than anything else and something the companies realize over time striking equity-based deals is investing!

But, most creators don’t even understand what a certain number of shares mean to them and the value of each. Fair, but they do have the ability to directly impact the value of the company; and, if you’re a D2C company spending on Meta & Google ads to advertise, you’re essentially paying taxes to a point of unsustainability.

Creators as investors (or LPs) in VC firms with unique positioning can be really competitive to traditional venture firms and makes creators the best people to partner with to promote your company.

Then, how does these firms operate & what the structure is like?

Concisely put: GPs/associates/principals having access to proprietary deal flow raise capital from LPs (influencers, high net-worth individuals, banks, institutions, etc.) to invest in the idea.

Creators are incentivized to increase the share value but the founders would have to break everything down to a very granular level to make them understand.

One fundamental advantage these creator-led venture firms can have is of a muti-faceted deal structure. Companies can raise lower in terms of capital but then getting access to the creators can lead to much better deals.

Creators angel investing is by far the most risky and rewarding (at the same time) way. It has its own Pros & Cons but creators can try to educate themselves on certain topics and be less demanding on deals.

By investing in one category, you eliminate yourself from it; becoming this exclusive partner not being able to work with the competitors, which is how it should be. This is something not talked about much.

It’s getting to be a part of the trajectory of great companies, a creator should only invest so much time & capital only when they feel compelled enough with the problem that the startup is trying to solve; and should be very comfortable not seeing the money at all.

You literally can’t expect to make money.

Your core objective should be to evaluate your offering/reason to be on the cap table. Basically figuring out your unique positioning as an angel investor; this way you can ensure deals coming your way.

Interacting with the team, adding value, slowly building reputation as an angel can put to owning the real upside that you sacrificed for that 10-video brand promotion deal.

You can also exchange equity for services, but these deals are usually hard to negotiate.

Now, let’s look at some deal structures that can help navigate this deal-flow system better (and, how to strike deals yourself):

1. Ask for the number of shares you will own & the value of each individual share instead of a percentage

2. [x]% + the rest amount of shares on installment/in some vesting period

3. Having advisory shares + number of services (posts) if you don’t want to put in capital

4. Some combination of equity + cash + incentive based on how much traffic you bring

A really good case study of such a company doing this is Kick (Stake.com). They’re partnering with creators on insane numbers up to $300M+, you can read about it here.

Power Laws still apply but this is the bigger game everyone should thrive to play in some capacity to drive the creator economy forward.