Structuring Equity for Advisors, Celebrities & Influencers: A Startup's Guide to Strategic Partnerships

Forging partnerships with celebrities and influencers requires a nuanced approach to compensation and legal frameworks. Based on our experience structuring these agreements, here are the key considerations for startups looking to leverage high-profile collaborations effectively.

Proven Expertise in High-Profile Partnerships

LexStart has successfully structured deals for some of India's most recognized brands with personalities. Our portfolio of collaborations includes:

• XYXX campaign with KL Rahul 

• Pilgrim campaign with Rashmika Mandanna & Samantha Prabhu

• BigBasket campaign with Sanjeev Kapoor

• Play CKC campaign with Ajinkya Rahane 

Key Compensation Models

When engaging a celebrity or advisor, compensation typically falls into one of twoncategories, or a hybrid of both:

• Cash Compensation: This can be structured as a fixed fee for services or as performance-based payments tied to specific marketing or sales milestones.

• Equity Compensation: This model fosters a deeper partnership and can include direct equity grants, vesting stock options (ESOPs), or phantom shares, which provide the benefits of ownership without diluting control.

Emerging Trends in Celebrity Collaborations

The landscape of celebrity endorsements is shifting from simple appearances to more integrated partnerships:

• Strategic Joint Ventures: An increasing number of brands are co-creating ventures with celebrities, sharing both risk and reward.

• Hybrid Deal Structures: Equity combined with milestone-based cash payments is becoming a popular model, aligning long-term incentives with short-term performance goals.

• Shift to Authentic Ownership: Celebrities are increasingly seeking genuine ownership stakes and active roles in the brands they support, moving beyond traditional endorsement relationships.

Critical Legal and Financial Guardrails

To protect your startup and ensure a successful partnership, meticulous attention to detail is paramount:

• Formal Documentation: Always begin with a comprehensive term sheet and follow through with definitive legal agreements. These documents should leave no room for ambiguity.

• Clarity on Governance and Compliance: Clearly define roles, responsibilities, tax implications, and compliance requirements from the outset.

• Impact on Future Funding: Understand how each equity structure will affect your company's control, valuation, and ability to raise future capital.

To further discuss your next celebrity partnership and receive a complimentary term sheet template, please contact us at connect@lexstartpartners.com