Ideally, everybody wins when a company enters into a services-for-equity agreement with an entrepreneur. Those on both sides of the equation are all in. Their goals are aligned. The entrepreneur gets a valuable service, and if the supplier does its job, it too will reap the benefits in the long run.
Everybody’s in lockstep. Everybody benefits from the “human, emotional element of building something big together,” as Alain Sylvain, CEO and founder of Sylvain Labs, once wrote for Inc. Sylvain calls it “a great equalizer” since “it changes the way companies value their time.” He emphasizes a “partnership” where the two parties must succeed together instead of treating it like a “transaction.”
Perhaps the most extreme example of the way in which a service provider might benefit from such a partnership is that of David Choe. The Los Angeles-based Korean-American artist was enlisted in 2005 by Sean Parker, Facebook’s president at the time, to paint murals on the walls of the then-fledgling company’s Silicon Valley headquarters. Rather than taking $60,000 in cash, Choe chose stock options instead, even though he would later say he regarded Facebook as “a joke” at the time. He would learn otherwise, as many of us would. And when the social media platform went public in 2012, his stock was worth $200 million.
Again, that’s certainly a best-case scenario. But as I’ve learned as CEO of a Detroit-based advertising agency, many a company can reap the benefits of a services-for-equity approach. My company invests a given amount of resources into a startup in exchange for an agreed-upon percentage of their company, the thinking being that if you do your job right, both parties stand to benefit.
