Thoughts on startups by investors that
fund them & entrepreneurs that run them

Blog Archives

The Right Way to Not Pay Yourself

Posted by on April 9th, 2013

Today I received an email asking me to clarify what I wrote last month in Why sweat equity often stinks. The person quoted the sentence in italics below and asked “what does that mean, exactly?” I’m including the whole point because the context helps:

Founders work for less than fair value and record the difference between actual pay and fair

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Why Sweat Equity Often Stinks

Posted by on March 6th, 2013

Somebody asked for standard boilerplate for sweat equity via the ask-me page on my website.

I am looking for a contract template which states an agreement for services in exchange for equity. I was hoping that you would have a template that you can share.

That’s not going to happen. Fundamental sweat equity is beautiful, blisteringly clear, and real. It needs

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What is the ratio of equity received for sweat equity vs. cash investment in a new venture?

There is no specific ratio between “sweat equity” and cash in a venture, and that’s actually not a good way to think about the issue. The bottom line is that cash is cash is cash, and everything else is “not cash”. The reason is that cash is fungible, which means it can be interchanged for everything else, from programming skills

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