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How to find/convince people to contract for equity--specifically designers and media production?

My startup has been talking to some video production companies about creating high quality videos and other media for our product. The quotes are coming back upwards of $80k for a pretty typical video (we're not renting fighter jets or hiring celebrities or anything).As with most early startups, cash is an extremely valuable resource for us, so those estimates aren't really realistic for us. That said, I understand that high quality media production is an expensive affair, and we're really not willing to compromise on quality.

So my questions are:
  1. where/how do you recommend looking for professional media producers who are willing to work with us in exchange for a cash/equity deal or purely for equity? And,

  2. How would you recommend I convince a professional media producer to work with us in exchange for equity?
I have the same question about CAD/industrial designers and artists, although the issue is less pressing as the costs are nowhere near as high for our situation.

18 Replies

Vijay Goel, MD
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Vijay Goel, MD Entrepreneur • Advisor
Founder Chefalytics, Co-owner Bite Catering Couture, Independent consultant (ex-McKinsey)
What do you want them to do? Best way to get the price down is to limit the scope and break down the work required.

If you have footage and a storyboard lined up, you can reduce a lot of the "pad" based on time to figure out what the client wants and generally get things done with more junior resources. The more ambiguity, the more senior support required. The more you want a blanket quote where they figure out everything themselves, the higher the price tag. Just like every other process in your business.
Kate Hiscox
1
0
Kate Hiscox Entrepreneur • Advisor
Boss at Venzee
Hi Jesse! Why do you need this?
Steve Owens
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0
Steve Owens Entrepreneur • Advisor
Finish Line - A Better Way for Small Companies to Develop Products
I think you have to find the right company. We do equity deals, but I do not know a single competitor of mine that would touch it with a 10 foot pole. Keep calling companies until you find one that has done it before. Do not try to convince someone who has not done it and does not want to do it. There are a lot of video company out there. Steve Owens - Finish Line PDS A Better Way for Small Companies to Develop Products e | Steve.Owens@FinishLinePDS.com p | 603 880 8484 w | www.FinishLinePDS.com 94 River Rd | Hudson, NH | 03051 Click for Product Development White Papers ---- On Mon, 16 Mar 2015 16:42:45 -0400 Jesse Hamburger<[removed to protect privacy]> wrote ---- FD:Discuss New Discussion on How to find/convince people to contract for equity--specifically designers and media production? Started by Jesse Hamburger Current: EiR Studio 9+ & ToySpark Founder. Former: Data Manager, Absolute Travel; Director, Westeros Project; My startup has been talking to some video production companies about creating high quality videos and other media for our product. The quotes are coming back upwards of $80k for a pretty typical video (we're not renting fighter jets or hiring celebrities or anything). As with most early startups, cash is an extremely valuable resource for us, so those estimates aren't really realistic for us. That said, I understand that high quality media production is an expensive affair, and we're really not willing to compromise on quality. So my questions are: where/how do you recommend looking for professional media producers who are willing to work with us in exchange for a cash/equity deal or purely for equity? And, How would you recommend I convince a professional media producer to work with us in exchange for equity? I have the same question about CAD/industrial designers and artists, although the issue is less pressing as the costs are nowhere near as high for our situation. FOLLOW DISCUSSION or Reply Directly to this email to participate in the discussion Manage your email notifications
Jay Schweid
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Jay Schweid Advisor
Seasoned Entrepreneur | Producer | Executive Producer | Mentor | Advisor | Dad
Happy to chat and see how we might be able to work together. Without knowing the scope it's hard to figure out a realistic budget.
Kent Nichols
1
0
Kent Nichols Entrepreneur
CEO at Content Startup in Stealth
Equity is a medium to long-term payoff. It could take years to see any upside from the project, or none at all. So from a media production perspective, equity is pure speculation and comes off as if they are doing it for free, so either you'll get very green folks, or you'll get people that are more into it as a hobby if there's zero cash involved. I would use equity more as a kicker in addition to cash. -K
Chris Carruth
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0
Chris Carruth Advisor
VP/Director. Strategy | Business Development | Operations | Product | Solutions
Another option, assuming that it is better to have some quality as a beginning point versus trying to persuade a top producer, who probably has too much work anyway, that is paid.

Check out college MBA film students..they typically have some experience and need a project as part of their capstone requirement.

Not the best, but much better than Uncle Charley..
Michael Shaun Conaway
4
0
Michael Shaun Conaway Entrepreneur
CEO Storyworks, CEO Ncite
Jesse, As a 20+ year owner of a small agency who does all of our own production, I can tell you that equity is a hard sell for companies like mine. The thing about a film is that it always takes a good number of people to produce the thing and they all have to be paid. In the cases where we have accepted equity, what I have done is given my services as a creative up for free and then charged for the rest of the crew and post team at cost + 10%. So on a 80K project you could possibly look to shave 40% off the price. That would put you at $56K for the budget on the project depending on the amount of live action and animation. If you need to get lower than that number, the place to look is in reducing the scope of the project. If you'd like for us to look at the project, let me know. Cheers, Michael Shaun
Dean Tucker
0
1
Dean Tucker Entrepreneur
VP Sales and Marketing, North America at Beddit
I've also been challenged with the upfront costs for video production, and other creative marketing elements. I have developed a concept with a few creatives and independent film/videographers that work on a small retainer, with some specific milestones that will trigger additional payments of the original estimated amount.

Keep in mind that in order for "equity" to mean anything, the contractor/vendor has to believe in the end result. In essence, you're asking them to be an angel investor. If you are planning a crowdfunding event, talk to other companies with successful crowdfunding and find out what they did, and how much it costs. Be careful promising payment from the crowdfunding event. You will need every penny you raise to deliver your perks as promised (probably more).

A one minute video may be all you need. If so, you should be able to get an acceptable quality for well under $25K if you don't need a lot of animation, effects or graphics. Suggest you practice and create your own video using a mobile device or laptop, or a consumer grade camera like GoPro or Sony. You can do your own edits and use these as a storyboard. If this video is just for raising money, don't waste yours. If you can't tell your story without a video, you need a better story, or a better storyteller.
Shingai Samudzi
1
0
Shingai Samudzi Entrepreneur
Founder & CEO at ProjectVision
Your options are: Provide them convincing evidence that your startup is on a path to success, the same way you would attempt to convince an investor (which is what they are, essentially) or Negotiate a deferred compensation plan, rather than equity, in which you pay them the invoiced amount if and only if you raise over a certain amount of money via funding round or client booking (ie revenue) or Some combination of cash up front and equity+deferred compensation
Bill Kelley
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0
Bill Kelley Entrepreneur • Advisor
Business Mentor
As COO of a company that produces high quality video, I'm going to discourage you from the path you're imagining. Even though we produce for Youtube and our cost is closer to $100 a minute [while commercial production companies range closer to $3000/minute], we would be hard to persuade.

Although our executives might be interested in the product-for-equity deal, as a company, we would still have hard costs related to personnel time - talent, camera, editing, script, equipment and travel... meaning we would want significant potential return on our costs. Think of it as better odds on a bet, since that's what it is.

The best thing for a startup in many cases is a bridge loan. If you are pre-funding and have a good story, you may be able to persuade an angel or incubator/facilitator to arrange a convertible bridge loan to cover some costs related to selling equity. The mechanics of convertible bridge loans are for a longer discussion in another place, but when you approach a VC or other funding source, you want the list of equity participants in your company to have more potential roles (and longer lasting value) with your company than a sales video.
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