Editing Sweat equity (section)

== Sweat equity shares ==

Sweat equity shares are discounted shares issued by a company to its employees or directors. The shares are given in exchange for a value-add by an employee or director. Sweat equity shares are essential when creating a startup with low amounts of funding.<ref name="Court Uncourt"/>

Sweat equity shares can be used as motivation for the startup's employees and will create a more level playing field against large corporations. In a [[startup company]] formed as a corporation, employees may receive [[Share capital|stock]] or [[Employee stock option|stock option]]s, becoming part-owners of the firm, in exchange for accepting salaries that are below their respective market values (this includes zero wages).<ref>[http://www.growvc.com/blog/2009/10/first-service-investment-platform-in-the-world-invest-work-and-competence-globally/ Grow Venture Community]</ref> The term used to refer to a form of [[Remuneration|compensation]] by businesses to their owners or employees.

The term is sometimes used to describe the efforts put into a start-up company by the founders in exchange for ownership shares of the company. This concept, also called "stock for services" and sometimes "equity compensation" or "sweat equity,"  can also be seen when [[startup companies]] use their shares of stock to entice service providers to provide necessary corporate services in exchange for a discount or for deferring service fees until a later date; see, e.g., "Idea Makers and Idea Brokers in High Technology Entrepreneurship" by Todd L. Juneau et al., Greenwood Press, 2003, which describes equity for service programs involving patent lawyers and securities lawyers who specialize in start-up companies as clients. The “Slicing Pie” model, outlined in [[Mike Moyer]]'s 2012 book Slicing Pie: Funding Your Company Without Funds, outlines a formula based entirely on sweat equity by observing the relative value of each person's unpaid fair market compensation and reimbursement.