Paying influencers in equity: what Canadian startups should paper before anyone posts

Early-stage consumer brands and apps sometimes offer creators equity instead of, or on top of, a cash fee. The pitch is attractive on both sides: the startup saves cash, and the creator shares in the upside they help build. The risk is that “we’ll give you equity” is easy to say and hard to turn into an enforceable deal.

This post is general information, not legal advice.

What the September 2026 lawsuit alleges

According to Bloomberg Law, in September 2026 a US family of creators with large followings sued Jams Frozen PB&J Inc., a crustless sandwich startup, in Delaware’s Court of Chancery. They allege that the company agreed to an endorsement deal paid in equity, sat on the paperwork for months while changing the terms, including switching from a grant of shares to options and reducing the size of the equity payment, and then backed out of the deal after a rival brand’s product appeared in one of the family’s videos.

These are allegations in a newly filed US case. They haven’t been proven, and US law governs that dispute. The contract lessons apply in Canada all the same.

Can a Canadian startup pay a creator in equity?

Yes, but promising “1%” isn’t enough. The company has to:

• Approve and issue it properly. Shares are issued, or options granted, by board resolution under the company’s articles, any shareholder agreement and, for options, an option plan that allows grants to consultants. Record it on the cap table and in the minute book.
• Rely on a securities law exemption. Issuing shares or options is a distribution of securities. National Instrument 45-106 (section 2.24) includes an exemption for employees, executive officers, directors and consultants of the issuer, where participation is voluntary. A “consultant” must provide services (other than services relating to a distribution of securities) under a written contract, and spend or be expected to spend a significant amount of time and attention on the company’s business. A creator on a long-term ambassador deal may meet that test; a creator doing a single post may not. Whether it fits depends on the facts, and other exemptions may apply instead.
• Think about tax. Equity received for services is generally taxable, and shares and options are treated differently. Both sides should get tax advice before signing.

What the agreement should say

The exact form and amount. Shares or options; the number, or a percentage on a stated basis such as fully diluted at a set date; the class of shares; and for options, the exercise price and expiry.

Vesting tied to deliverables. Equity can vest over time or as content milestones are met, with a cliff if appropriate. That protects the company if the relationship ends early and gives the creator objective triggers.

Exclusivity that’s actually defined. Name the product categories or competitors that are off-limits, the period, and whether a competitor’s product appearing in someone else’s content counts. Vague exclusivity is a common trigger for creator disputes.

Termination and the equity. Who can end the deal, on what notice, and what happens to vested equity, unvested equity and any cash already paid.

Disclosure. Owning equity is a material connection. Every sponsored post still needs a clear disclosure, and a financial stake makes it more important, not less.

Content rights. Who owns the content, how long the brand can use it in ads and whether the brand can run ads through the creator’s account. See usage rights.

A deadline for paperwork. Set a date by which the equity documents will be signed, and say what happens if they aren’t, such as a cash fee in lieu.

What creators should ask

• Shares or options, and how many, out of how many outstanding on a fully diluted basis?
• What’s the latest valuation, or the valuation cap on any SAFEs?
• When does it vest, and what happens if the deal ends?
• Can you ever sell it, and what restrictions apply under the shareholder agreement?
• Is there a cash component? Equity in an early startup can be worth a great deal or nothing.

Before the first post

• Put the equity terms in a signed creator agreement.
• Approve the grant at the board and document it.
• Confirm the securities law exemption.
• Define exclusivity and termination in plain terms.
• Make disclosure a contract requirement.

We prepare brand deal contracts, stock option plans and shareholder agreements at fixed fees, listed on our fees page. If you’re structuring an equity deal with a creator, book a free 15-minute consult.