Sweat Equity investing in startup world attracts a lot of attention know, when starting a company is easier than ever. What is all the fuzz about & what are the common pitfalls in using it? Check out this slideshare from Finnish Digital Serial Entrepreneur & Investor Teemu Malinen.

1. SWEAT EQUITY
INVESTING
Pic: askideas.com
Digital Serial Entrepreneur
Teemu Malinen

2. Party's contribution to a start-up in the form
of human effort (vs. capital investment).
SWEAT EQUITY
[swɛt ˈɛkwəti]

3. Pic: inc.com
Sweat equity is
the most valuable
equity there is.
”
- Mark Cuban
”

4. Pic: suomenkuvalehti.fi Pic: cad-notes.com

5. It’s (too) easy to ask & to promise.
SWEAT EQUITY DILEMMA

6. Pic: suomenkuvalehti.fi
Help me to build
my startup?
- Startup Entrepreneur
”

7. ”
Pic: suomenkuvalehti.fi
Sure, I’ll help you!
- Sweat Equity Investor
Pic: scoutingmagazine.org

8. Everybody act naturally sharp around money.
CASH IS SAFE
Pic: weheartit.com

9. Pic: happycatsonline.com
Give me 100 k€
for my startup?
- Startup Entrepreneur
”

10. ”
Pic: suomenkuvalehti.fi
I’ll invest 100 k€
to your startup.
- Capital Investor
Pic: financialuproar.com

11. Always convert sweat equity to capital worth before investment.
The correct valuation of sweat equity effort is market pricing.
SOLUTION
• Start-up valuation is 500 k€
• Sweat equity work is converted to worth of 50 k€
• Sweat equity share equals 10% ownership of the start-up
EXAMPLE

12. pitfalls
When using Sweat Equity

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1 Definition of done can be vague
Pic: pinterest

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2 How to measure “soft” effort?
Pic: tinybuddha.com

15. Pic: suomenkuvalehti.fi Pic: financialuproar.com
3 Even “hard” effort is not valued
like capital

16. things to
consider
When using Sweat Equity

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1 Sweat equity investor type:
single person or a company? Pic: profassist.in

18. Pic: suomenkuvalehti.fi Pic: financialuproar.com
2 Investment effort type:
hours or value? Pic: 10khrs.co

19. Pic: suomenkuvalehti.fi Pic: financialuproar.com
3 Ask sweat equity and/or
capital?
100% Capital Investment100% Sweat Equity
?

20. Pic: suomenkuvalehti.fi Pic: financialuproar.com
4 One-time or continuous need?
Pic: motor1.com

21. Learn to operate sweat equity like capital.
Happy sweatin’ ! ☺
SUMMARY
Pic: iconfinder.com