Sweat Equity
Definition
Sweat equity is ownership earned through work rather than cash: founders, early employees, and sometimes advisors or contractors compensated in shares for below-market pay.
Wie es im Fundraising vorkommt
Sweat equity is why vesting exists: contribution-based ownership must be earned over time, not granted permanently on day one.
Häufig gestellte Fragen
How is sweat equity valued?
By negotiation, usually referencing forgone market salary and risk; formalize it in shares with vesting rather than vague promises.
Can contractors be paid in equity?
Yes, with proper agreements and IP assignment; loose equity-for-work arrangements are a classic diligence problem later.
Verwandte Begriffe
Setzen Sie diesen Begriff ein
Definitionen gewinnen nur dann Verhandlungen, wenn Sie sich in einer befinden. Finden Sie die Investoren, die Ihre Phase finanzieren, und beginnen Sie das Gespräch.
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