Sweat Equity refers to ownership earned through labor, time, or contribution of services rather than through cash investment, commonly associated with founders and early employees building the company. In startup formation, Sweat Equity is typically reflected in founder stock or option grants with vesting, and documenting Sweat Equity properly is important for tax, IP assignment, and cap table clarity.
Ryan RobertsStartup Lawyer
Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration.
