Hi folks, our startup - a commercial real estate data startup has made a connection with what was initially thought to be a potential customer (a financial firm) that totally gets what we are building and sees value in bringing in finance referrals (commercial real estate loans) and potential deal flow (commercial transactions) to their business.
In other words, I came away from the initial meetings with the message "we want you to build what you are building for us".
However the twist is that they are looking to share in the upside of this venture (equity). I struggle with how to structure this kind of deal. This is my take so far:
1. with a combination of sweat equity (we'll likely be meeting once per week at min to optimize our software for their biz) and I'm thinking to ask for a small investment (for skin in the game) in exchange for some % equity
2. as well as an agreed to % of the loans generated & $ amount of the deals that would go to us via any biz that we direct to that firm.
3. If certain milestones are hit - such as xxxxx in dollar amount of total loans/deals then we'd be open to more equity sharing.
I was curious if any FDers had experience/warnings/advice with this kind of arrangement. Or perhaps a more tried and tested strategy?