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Entrepreneurship & Startups vocabulary · Equity & Valuation

Sweat equity

Meaning in entrepreneurship & startups, with examples

/ˈswet ˌekwəti/nounAdvanced term

In entrepreneurship & startups, sweat equity means: Ownership in a company that someone earns through work and time rather than money, typical of founders and early team members who are paid little or nothing.

In Turkish: emek karşılığı hisse, emek sermayesi

How it is used

Used when founders talk about the value of unpaid work: we put in two years of sweat equity. It also describes giving equity to developers or designers instead of paying them. Such deals need clear written agreements and usually vesting.

Example sentences

  1. The developer joined for sweat equity, taking 5 percent instead of a salary for the first year.

  2. Investors respect the sweat equity the founders have put in, but they still want to see results.

Common collocations

  • put in sweat equity
  • sweat equity deal
  • in exchange for sweat equity
  • equityOwnership in a company, divided into shares. In startups, equity is what founders, employees and investors hold, and its value grows if the company succeeds.
  • vestingA system in which founders or employees earn their shares or options gradually over time, so that someone who leaves early does not keep everything.
  • co-founderOne of two or more people who start a company together and share the ownership, the work and the main decisions from the beginning.
  • bootstrapTo start and grow a company with your own savings and the money it earns from customers, without raising funds from outside investors.

More terms: Equity & Valuation

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