The venture capital trap

Let's be honest: venture capital works when you're building a billion-dollar rocket company or curing cancer. But most of us? We're building solid, real businesses – SaaS tools, newsletters, digital products, games – that serve paying customers from day one.

The problem? The standard funding paths weren't designed for that. In startup circles, admitting you want a profitable, long-term business is almost taboo. Everyone's pitching “the next big thing” while quietly burning through millions.

VC is an all-or-nothing bet. If you don't swing for a massive exit, you're considered a failure. But what if you want to build a good business, earn a living, and stay in control? That's where the gap appears.

The profitable middle no one talks about

While Twitter debates unicorns, thousands of founders are quietly building profitable businesses. Solo developers, small teams, indie hackers – pulling in $50k, $500k, $5M a year. They don't want forced exits or a boss in their boardroom – they just want practical cash to grow.

The SaaS revolution and creator economy made this possible: a single developer can launch software or a course that serves thousands of paying customers. And these builders figured something out: you don't need to lose money for years to build something valuable. You can charge from day one and stay alive without giving away your company.

But sometimes you do need more fuel – a new hire, marketing push, or a spin-off product. And that's when the funding gap appears.

The funding squeeze

Traditional banks don't get it – they want trucks, buildings, or collateral they can repossess. Revenue lenders often load you with painful payback terms. VC wants moonshots and unicorns.

So where do you turn if you need $50k–$500k to grow a project that's already working?

What real builders actually need

It's not rocket science:

  • Upfront support without selling control. Builders want funding, not new bosses.
  • Shared upside. Supporters win when revenue comes in – not only at some distant exit.
  • Project-based, flexible. Raise for what you need now, not the entire business.
  • Clear, simple terms. Keep it standard. Keep it fair.

The fix: revenue-based royalties

This is where royalties fit in.

Imagine this: a few early backers put up cash for your new SaaS feature or next game. In return, you share a small slice of that project's revenue as sales roll in – until they're paid back with a fair return.

No new board seats. No equity dilution. No forced exits. Just a clear agreement: "You backed this, you get a fair piece of what it earns."

Reference price & fair exit

One key piece: a simple reference price. Everyone agrees upfront what the project is worth. If you sell, shut down, or merge the project before your backers are paid back in full, they get fair compensation based on that agreed number.

It's not about valuations and endless negotiations – it's just basic fairness. You stay in charge – they stay protected.

Why early-stage backers should love it

Unlike traditional “investing” that might take years to pay out – royalties flow when sales happen. Your supporters share in your upside immediately. The more you earn, the more they earn.

It's simple, aligned, and protects everyone if plans change.

Who this helps

Revenue-based royalties aren't for billion-dollar rocket ships. They're for:

  • Indie SaaS with steady MRR.
  • Creators selling courses, newsletters, and digital products.
  • Game studios funding one title at a time.
  • Makers with multiple small projects.
  • Builders who want profit and freedom.

Making it real

This works best when it's easy to use. So we're open-sourcing two simple royalty agreement templates:

  • Full version: includes a steering committee with a seat for your backers – so they can offer input while you keep control.
  • Simple version: same structure but no formal seat – pure revenue sharing, minimal oversight.

Both use clear terms: what % of revenue is shared, what return supporters receive, and how to handle exits fairly.

Ready to try it?

Grab the templates, adapt them for your next launch, and share your feedback. If you're a builder who cares about staying profitable and treating your early supporters well – this might be the missing piece you've been waiting for.

Check out the Open Royalties repo →