It sounds to me like you're thinking of this in terms of revenue share - a deal where you get 15-18% of revenue (for an agreed period of time) might make sense for something like an iPhone app. That's not the same thing as startup equity though. As others have commented, anything that complicates the cap table like this can make it MUCH harder for companies to raise investment later on.
Along the lines of a traditional royalty model perhaps? I could see that being an interesting third possibility, versus either equity (as monkeymeister suggests) or deferred compensation (as tptacek suggests), or just plain cash. But yes, it seems like a good fit mainly for cases like an iPhone app where you have a specific delineable product to apply royalties to, roughly like you do with books or music albums.
Agreed - this is also another option. Perhaps I've placed a little too much emphasis on the equity stake side. This would also be a great way to proceed, with a straight royalty or revenue share option for the like of a partnership agreement.
Comments
It sounds to me like you're thinking of this in terms of revenue share - a deal where you get 15-18% of revenue (for an agreed period of time) might make sense for something like an iPhone app. That's not the same thing as startup equity though. As others have commented, anything that complicates the cap table like this can make it MUCH harder for companies to raise investment later on.
Along the lines of a traditional royalty model perhaps? I could see that being an interesting third possibility, versus either equity (as monkeymeister suggests) or deferred compensation (as tptacek suggests), or just plain cash. But yes, it seems like a good fit mainly for cases like an iPhone app where you have a specific delineable product to apply royalties to, roughly like you do with books or music albums.
Agreed - this is also another option. Perhaps I've placed a little too much emphasis on the equity stake side. This would also be a great way to proceed, with a straight royalty or revenue share option for the like of a partnership agreement.