Said No to 10% Equity - Took 3% Revenue Share - Made $168K Year One 🔥
Healthcare startup offered 10% equity valued at $300K on paper. Took 3% revenue share instead. Made $168,000 cash year one. Still collecting monthly. No vesting. No exit dependency. THE OFFER: Building clinic management platform. Needed patient intake automation built. Founder pitch: "We're raising Series A next quarter at $3M valuation. 10% equity for you. That's $300K value for the automation work." Sounded amazing. Until I did the math. THE EQUITY MATH: 10% of $3M = $300K valuation But: - IF they raise at $3M (valuations fluctuate) - IF I vest (2 year cliff, 4 year total) - IF they exit (5-7 years minimum, 50% of startups fail) - IF my shares aren't diluted (Series B, C will dilute heavily) My cash flow year 1-2: $0 My guarantee: Nothing THE ALTERNATIVE I PROPOSED: Me: "What if I take 3% of revenue from the intake automation feature instead?" Them: "Revenue share? That's unusual for contractors." Me: "Your intake volume is going to 10X this year as you add clinics. 3% of growing revenue beats static equity. Plus I need cash flow, not lottery tickets." THE DEAL STRUCTURE: Payment terms: - $10,000 upfront for initial build - 3% of monthly intake automation revenue (billed monthly) - Tiered scaling as volume increases - No equity, no vesting, no exit dependency YEAR ONE PERFORMANCE: Upfront payment: $10,000 Revenue share monthly: - Month 1-3: $4,200/month (initial rollout to 2 clinics) - Month 4-8: $12,400/month (expanded to 8 clinics) - Month 9-12: $18,600/month (full 15-clinic deployment) Total year one: $168,000 cash collected Their equity: Still private company. Still worth $0 in cash terms. YEAR TWO (CURRENT): Revenue share: $18,800-$19,000/month (at my cap, maintaining) Total collected over 2 years: $336,000+ That "small" revenue share already paid more than most equity would in 10 years. THE PROTECTION CLAUSES I NEGOTIATED: - Monthly payment (not annual lump sum - maintains steady cash flow) - Revenue-based calculation (not profit-based - can't hide in accounting)