|I'm an average full stack developer working freelance. I've got some experience managing myself, and mentoring other developers, running a business not so much. Currently I have the luxury to spend about a third of my time working on side projects.|
I would like to try use this time to bootstrap a startup. The focus will be enterprise software for a specific industry, unrelated to my other work. However, I do have some insight, and connections to this industry. I want to manage the project as a single developer and eventually sell subscriptions to SaaS.
One model for funding is a single client that pays upfront (at discounted rate), with the understanding that it's my product, and I'll eventually on-sell it. This is not practical in the industry I want to focus on. My product should be impartial, not associated with a single player. An idea only will be too hard a sell, I'll need a MVP to generate some interest.
Another approach is to pay for the project with my time, maybe also spend some savings paying contractors. I'll be invoicing myself for developer time.
It occurred to me that I can give people the opportunity to buy in by paying a part of the cost. Maybe even pay for specific features. As incentive, rather than shares in a business, I would offer future profit sharing. Investors can buy in at any time and pay as much or as little as they want. The profit share is determined by the fraction of dev time that you've contributed, or paid for in cash. Does this make sense, am I using the right terminology? Am I just describing a specific type of share ownership in different words?
Anyone tried this before, any tips or recommendations on how to structure such an agreement?
Tbh, I imagine the subscriptions only making a modest amount of profit if the project is successful. I'm fairly confident the bootstrap cost can be kept to a minimum. If costs start spiraling, or subscriptions just don't sell I want to walk away and continue doing contract work.