> many angels won’t invest in startups that aren’t likely to scale to the $50 million valuation level because they’re afraid VCs won’t invest.
Firstly, I don't think this is true. Angels won't invest because their business model is the same as the VC's model.
I'll be blunt and say that I think this is a pretty bad idea for both sides of the table: founders and angels/investors. In fact, this would be an even worse deal for bootstrapped companies than it would be for non-bootstrapped companies. This is bad for founders because it impacts revenue. A normal SV startup has no revenue, so it's not too impactful there, but for a bootstrapped company, having to give 0.X% revenue can be really hurtful. Less revenue = less growth and more likely to run out of cash. The vast majority of founders would probably prefer giving equity than doing a rev. share.
Secondly, this idea depends on the assumption that bootstrapped companies are inherently much, much less risky than typical go-big startups, which is the only way in which I can see the risk ratio justifying the much smaller potential returns of having a rev share of a slow-growth company. I do not think this is the case.The whole reason for the go-big VC ecosystem is because startups - any startups - are extremely risky, and you therefore need an extremely high potential reward (i.e 50-200x return) to justify investing in them. Bootstrapped companies are not sufficiently less risky (in fact, I would argue they are more risky than VC backed companies).
Another problem: would you cap the rev payout or would the payout continue in perpetuity? Investors wouldn't like the former because it caps their reward, founder wouldn't like the latter because it's an obligation that lasts for a very long time.
Finally, given that most startups exit as acquisitions, what then? Again, an entire avenue for rewarding investors is cut off.