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Don’t Misunderstand Sweat Equity

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Don’t misunderstand sweat equity. Fundamental sweat equity is beautiful, blisteringly clear, and real. Most other sweat equity is full of potential problems, misunderstandings, and disappointments. The post Don’t Misunderstand Sweat Equity appeared first on Gust.

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

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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. You might have created that value by slaving 18 hours a day, seven days a week for five years (in which case the value of the sweat equity is $8.70

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The Smartest Entrepreneurs Bootstrap Their Startup

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Investors are not interested in covering overhead, unless they are convinced that you have already put all your “skin in the game” (not just sweat equity), and have real contributions from friends and family. General startup expenses are beyond your means.

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8 Key Questions To Expect In Investor Due Diligence

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The intent of this question is to determine the level of commitment of founders, both cash and “sweat equity,” and how much others have already invested into this plan. If the runway is less than six months, with no new source signed, both you and the startup are at risk. How much “skin” is already in the game?

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Mathematical vs. Economic Dilution of Startup Equity: Thinner Slices of an Extra-Large Pizza

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.” That’s because whatever price the public investors are paying for their shares, the founders, employees and earlier investors invariably paid less (in cash; sweat equity is another story).

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These 10 Key Elements Make a Business Plan Fundable

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Quantify existing skin-in-the-game, by insiders and outsiders, including sweat equity and capital. Funding requirements. Explain how you calculated the funding requirements, and show details on planned use of funds. Include a current valuation estimate.

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Second-Class Investor Citizens: Facebook’s IPO and Dual-Class Equity Structures

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Nevertheless, these preferences aren’t intended to last forever.

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