Generally, the risk/benefit is fair because the chances are that the startup will fail. If the startup succeeds, then both parties would be fairly compensated.

Generally, the risk/benefit is fair because the chances are that the startup will fail. If the startup succeeds, then both parties would be fairly compensated. But, by not paying upfront then the startup could save money and hopefully gain time to be successful. (I'm neither for or against the idea, but thusfar it seems that most people are against it)