We're all familiar with the traditional shared equity arrangements in a startup; Some contribution = Some % of shares (thus equity) in the company, which may or may not payoff down the road at either buyout, acquisition, going public, or some other appropriate exit/stay stage for the investors. We also know that equity can be acquired by the employees in return for services, or a discount on those services.
Rather than offer equity in the company to prospective talent, I'd like to come up with an arrangement where I obtain services in return for a share in future revenues for only the specific products that person actually contributes toward. On the surface, it would appear I'm describing royalties, but I'm fast forwarding a bit and wondering how I might deal with evolving team makeup and ongoing product revisions in such an arrangement, as royalties tend to deal with static products. In our tech world - specifically software - the product is ever evolving.
Anyone have knowledge on an alternative to traditional equity arrangements that is more along the lines of what I'm looking for, or have advice on the subject?
BTW - I have not dismissed entirely the idea that I may ultimately have to carve out company equity in the form of stocks for valuable key talent. I'm just want to consider other creative alternatives.
