Yep. It's pretty incredible.

Good thing startup founders are usually a little bit better at math. Seems like it'd be about like this:

    "Advance" your startup $1M (really, advanced to yourself,
    since you're hanging onto the money)

    Sell the startup dubious services at outrageous prices,
    force them to make your dumb cousin an SVP

    "Pay back" the loan with %10 of the *profits*

    When the profits top $10M, the founders *start* seeing 
    10% of what comes in (after expenses, of course)

I'm in the wrong line of work.

edit: As I read this, I'm realizing that there probably are termsheets out there that aren't far off from this.