Ahhh, that makes a lot more sense. Thanks!

Does the benefactor have to pay tax on that 5%? If not, this is an amazing deal for the benefactor!

If I am reading the Wikipedia article correctly (and if the article itself is correct), the benefactor does pay tax on that 5%.

However, if the OP had kept his startup in his own name, then at the time he sold it, he would have had to pay capital-gains tax on all of his profit, that year. (And then he would have been able to spend the remainder on whatever he wanted, that year.)