You manage the balance sheet. This goes on it.
Written for the business manager who has to underwrite this: where the cash comes from, when it comes back, what protects the downside, and how the position sits in the client's estate - stated plainly enough to mark up.
The five things you actually underwrite
1 · Capital exposure: none required
The artist is not the funding source. Manufacturing sits inside product cost, operations run on an existing platform, and launch inventory is financed at the venture level. Your client's exposure is time and name - material, but insurable by structure rather than by check.
2 · Cash timing: distributions from free cash flow, never from debt
Distributions follow a written policy and are paid only from positive free cash flow. No one borrows to simulate a dividend. If the plan you are shown pays the artist before the company earns it, it is an endorsement wearing an equity costume.
3 · Downside protection: three negotiable floors
A recoupable guaranteed minimum payable regardless of sell-through; a royalty-first structure paying from the first unit with conversion rights; or a reversible paid capsule pilot that generates sell-through evidence before any permanent commitment. Which floor fits depends on the client's cash needs and risk posture - all three are on the table.
4 · Tax character and the estate
A fee is ordinary income in one tax year. A vested equity position taken to exit is largely capital in nature - subject to your counsel's structuring and jurisdiction - and it is transferable: the difference between income and legacy. We expect and welcome your tax counsel in the room.
5 · What failure costs
The honest case: the venture may not reach scale. The structure is built so that failure costs the client time and opportunity, not capital - vested economics are kept, unvested simply stops, and earlier stages are deliberately reversible. We would rather show you that mechanism in writing than promise you a number.
Figures on this page are illustrative composites drawn from publicly reported transactions; they are not a projection, an offer, or legal, tax or investment advice. Every structure is negotiated per venture in definitive agreements prepared by counsel. StarPower is not affiliated with and has not been endorsed by any artist or brand named in public case studies.
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