I've been doing this full-time for the last year. It's worked well for me in the SF area because it's a lot easier to get in the door for new companies/products than with established companies that already have dev teams. I also like working on brand new products and technologies and startups are great for that. :)

The main lesson I've learned working with startups is that consulting is always easier working for people that are spending other people's money. The guy who spent the last year saving $10K of his personal earnings to build his genius daily deals for big data social mobile app? He's going to try to squeeze you for everything he can get. The startup that raised a $1.5MM series A? Going to treat dealings like a business negotiation and probably be less emotional to deal with.

That being said, you still want to manage risk based on who you're dealing with. If I'm consulting for a company with $50MM in revenues and 200 employees, I'm not worried about them going under tomorrow, so I'll let them pay me monthly net-30. If I'm consulting for a 5 person startup that's operating on a seed round, I'll usually require weekly net-7 or net-15. I've started avoiding companies that seem sketchy or are operating off personal savings, but if I was going to work with those types of clients in the future, I'd do a prepaid retainer.

Of course, this varies on a case-by-case basis so YMMV.