Some years back I played around with an idea like this as a possible funding vehicle for smaller clients. A few thoughts, on the assumption that you're in the

Some years back I played around with an idea like this as a possible funding vehicle for smaller clients. A few thoughts, on the assumption that you're in the U.S.: 1. What you're talking about is somewhat like a royalty arrangement. The IP-licensing world has a lot of accumulated wisdom about how, and how not, to do those. For example, your participants likely would want audit rights, or alternatively for you to commit to providing audited financial statements (which can be expensive). 2. What you're talking about is also much like some types of preferred-stock dividend, which are familiar to the financial community. 3. Watch out for the securities laws. Depending on what the terms were, your arrangement would very likely constitute a "security" under U.S. law. That in turn would mean that (depending on who participated) you'd have to comply with disclosure- and registration-or-exemption requirements under federal and state law, or be subject to significant legal penalties. 4. Also watch out for usury laws -- you'll want to structure your investment so that it doesn't constitute a loan. (Although that's less of a concern, given that you'd be the one paying "interest.") 5. It could be dangerous to pre-commit to paying out X% of your gross revenue each month. That could create a severe cash-flow crunch and constrain your ability to grow the business. Don't forget that you must pay taxes and remit tax withholding for any employees you have (or the IRS will come for your house), and you really want to make payroll if you want to keep your employees around. Instead you could consider having unpaid royalties accumulate. (That's like a cumulating preferred dividend.) 6. You'd want the right to buy out your participants (sometimes known as a "call") and would need some sort of formula to determine the buy-out price. Without a buy-out option, it might be difficult to attract other investment and/or to be acquired. One approach I've toyed with but haven't thought through: The buy-out price is some multiple of the amount the participant paid in, increasing at Y% per year but reduced by the amounts of any royalty payments. That'd be like a bathtub with both the faucet and the drain open: The water level rises and/or falls depending on the comparative rates of flow in and out, with the "water level" at any given time being the buy-out price. 7. You definitely want to check with a lawyer about this (not me; I don't do this kind of work). As usual, don't rely on this as a substitute for legal advice about your specific circumstances; YMMV; etc. etc.