Sweat Equity

Sweat Equity is when a person receives ownership in a project or company in return for their time, effort and expertise.

When the person is an employee there is frequently a vesting period. The employee earns their shares over time

The problem is when the person is a founder. The founders rarely have a vesting period. This also means that if one of the founders doesn’t do their share of the work, they potentially end up with shares that they haven’t earned.

If you are partnering with others and sweat equity is involved, take the time to figure out how to protect everyone concerned.

Have a great day!