Dynamic Equity Pricing for Non-Monetary Contributions

Dynamic Equity Pricing for non-monetary contributions focuses on assigning fair value to efforts, skills, intellectual property, and other intangible inputs that participants bring to a business. Instead of monetary equivalence, this approach relies on measurable, non-monetary methods of assessment.

Identify types of non-monetary contributions, such as:

• Time and Effort: Hours worked, tasks completed, or milestones achieved.
• Skills and Expertise: Specialized knowledge or technical abilities.
• Intellectual Property: Patents, proprietary technology, or creative designs.
• Networks and Relationships: Strategic partnerships, introductions, or client leads.
• Reputation and Branding: Leveraging personal or professional influence for the company’s growth.

Contributions are measured using non-monetary approaches, including:

• Assign points based on effort, impact, or importance.
  1. Example: Completing a major feature = 50 points, client introduction = 20 points.
• Define categories:
  1. Effort Points: Number of hours worked (e.g., 1 point/hour).
  2. Impact Points: Measured outcomes (e.g., 10 points for securing a major client).

• Use “slices” to represent relative contributions over time.
• Example: Total slices contributed by all participants = 1,000. If a person earns 100 slices, they own 10% of the equity.

• Award contributions when specific milestones are reached.
  1. Product Development: Completing a prototype.
  2. Business Growth: Securing an investment or partnership.

• Score contributions based on measurable outcomes:
  1. High Impact: 10 points.
  2. Moderate Impact: 5 points.
  3. Low Impact: 1 point.

• Assign weights to tasks or roles based on their importance:
  1. Example: Coding = 3x weight, administrative tasks = 1x weight.

Ownership percentages are recalculated periodically to reflect contributions:

• Formula:

Ownership % = (Contributor’s Total Contribution) ÷ (Total Contributions of All Participants)

Example Calculation:

• Contributor A: 200 points.
• Contributor B: 300 points.
• Contributor C: 500 points.

• Total Contributions = 1,000 points.
  1. Contributor A: 200 ÷ 1,000 = 20%.
  2. Contributor B: 300 ÷ 1,000 = 30%.
  3. Contributor C: 500 ÷ 1,000 = 50%.

Use tools to track and manage contributions:

• Tracking Software: Tools like Clockify or Toggl for time contributions.
• Equity Management Platforms: Platforms like Slicing Pie or Cap Table tools.
• Collaboration Systems: Spreadsheets or tools like Notion for real-time updates.

• Encourages ongoing contributions by adjusting equity dynamically.
• Recognizes the value of intangible assets and effort.
• Builds fairness and transparency among team members.

• Subjectivity in valuing non-monetary contributions.
• Requires continuous tracking and recalibration.
• Potential for disputes over perceived contribution value.

A startup has three founders with the following contributions:

• Founder A: Developed the prototype (200 points).
• Founder B: Secured a key investor (150 points).
• Founder C: Built branding and marketing strategy (100 points).

Total Points = 450

1. Founder A: 200 ÷ 450 = 44.4%.
2. Founder B: 150 ÷ 450 = 33.3%.
3. Founder C: 100 ÷ 450 = 22.2%.

This ensures that contributions are fairly valued and equity is distributed proportionally.