I have joined and invested in a Canadian telehealth software company that, since inception, has focused on the Canadian market exclusively. I see a much bigger opportunity for us in the US market. The big challenge is figuring out how to penetrate this market. It's large, complex and profit-driven which is very different from our socialized healthcare system in Canada. While I have experience in healthcare, I don't know the US market very well. So I'm currently evaluating different route to market approaches. We can try a direct sales approach, establish partnership channels or try to lure the right person on board (feet on the street) or combination thereof.
In my discussions with many people in the US I have come across an individual who might be a great fit for us. He possesses 20+ years in the telehealth field (business dev, sales...), knows the US healthcare market intimately, has a ton of contacts in the very target market we're going after. He also loves what we're doing, our products and sees a huge opportunity. He's currently working as a consultant, advising some healthcare startups but is looking for something permanent.
The only problem is that we can't afford to pay him anything right now. He's open to exploring some creative solutions. One possibility might be stock options. But he's in the US and we're in Canada. Perhaps this might be complicated and might not provide a sufficient enough incentive. Of course, if he sells our products he'll get a good percentage of the deal but sales cycles are not quick and I'm not sure I can sway him to work on spec.
I thought of another approach: We can set up a company in the US and give him actual equity. Maybe 10% to start with some performance-based option to earn more equity. We'd build in a minimum retention period for the equity. So out of the gate we own 90% and he owns 10% but has to work for no comp until sales result. All US sales go through the US subsidiarity and the Canadian company provides the IP, technical and marketing support. Maybe the parent company charges the US company a support and admin fee based on a % sales.
Does this approach make sense? Any downsides or pitfalls to avoid? If we went with this approach, what type of US corporation do you need? I understand that there are different types and jurisdictions in which to incorporate.