Equity Input Form
Example Data Table
| Scenario | Company Value | Cash | Sweat Value | Assets | Risk Multiplier | Option Pool | Future Dilution |
|---|---|---|---|---|---|---|---|
| Early technical partner | 500,000 | 75,000 | 40,000 | 25,000 | 1.10 | 10% | 15% |
| Cash heavy partner | 800,000 | 200,000 | 20,000 | 0 | 1.00 | 8% | 12% |
| Strategic partner | 650,000 | 50,000 | 80,000 | 60,000 | 1.20 | 12% | 18% |
Formula Used
Base Contribution = Cash + Sweat Equity Value + Asset Value + Debt Assumed
Adjusted Contribution = Base Contribution × Risk Multiplier
Post Contribution Value = Current Company Value + Adjusted Contribution
Gross Partner Equity = Adjusted Contribution ÷ Post Contribution Value × 100
Equity After Option Pool = Gross Equity × (1 − Option Pool %)
Final Equity = Equity After Option Pool × (1 − Future Dilution %)
Vested Equity = Final Equity × Completed Vesting Months ÷ Total Vesting Months. If completed months are below the cliff, vested equity is zero.
Partner Shares To Issue = Existing Shares × Gross Equity ÷ (100 − Gross Equity)
How To Use This Calculator
Enter the current company value before adding the new partner contribution.
Add the partner cash, sweat equity value, asset value, and debt support.
Use the risk multiplier when early risk or strategic value needs weighting.
Add expected option pool and future dilution percentages.
Enter existing shares if you want an estimated share issue count.
Add vesting details to calculate earned equity today.
Press the calculate button. The result will appear above the form.
Use the CSV or PDF button to save the result.
Partner Equity Planning Guide
Equity Basics
Equity is a statistical estimate of value, risk, and future reward. A partner may bring cash, labor, assets, debt support, market access, or special knowledge. Each input changes the ownership story. A fair percentage should not depend on instinct alone. It should compare measurable contributions with the current business value.
Why This Calculation Matters
Partner equity affects control, voting power, profit sharing, dilution, and exit payments. A small error can become costly after growth. The calculator uses a post contribution method. It treats the venture as a pre money value. Then it adds the adjusted partner contribution. The partner share is the contribution divided by the new total value.
Advanced Inputs
Cash is simple. Sweat equity is harder. Estimate sweat equity from market pay, hours, and replacement cost. Intellectual property should use a conservative value. Debt assumed by the partner can also raise contribution value. A risk multiplier lets you reward early stage uncertainty. Use it carefully. Excessive multipliers can overstate ownership.
Dilution And Vesting
Raw equity is not always final equity. Option pools and future funding rounds reduce ownership. The tool applies those reductions after gross equity is found. Vesting then shows what the partner has actually earned today. A cliff blocks vesting until a minimum service period is reached. This protects the company when a partner leaves early.
Using Statistical Judgment
No calculator can replace legal drafting or valuation review. Still, structured math gives a neutral starting point. Try several scenarios. Change the pre money value. Compare cash only equity with contribution weighted equity. Review the implied shares to issue. If the percentage feels too high, test lower sweat values or longer vesting. If it feels too low, review whether strategic value was ignored.
Scenario tables are useful. They show how the same offer changes when valuation, future dilution, or vesting assumptions move. This makes negotiation calmer because partners can discuss inputs instead of arguing over percentages.
Best Practice
Document every assumption. Keep a record of agreed values, vesting rules, dilution expectations, and profit sharing rules. Revisit the calculation before signing. Partners should understand both the number and the method behind it. Clear math reduces disputes. It also helps founders create balanced ownership agreements.
FAQs
1. What is partner equity percentage?
It is the ownership share assigned to a partner. It may reflect cash, labor, assets, risk, and negotiated value. The percentage can affect voting, profit sharing, dilution, and exit proceeds.
2. How is sweat equity valued?
Sweat equity is usually valued from unpaid work. Estimate market pay, expected hours, skill level, and replacement cost. Use conservative numbers because inflated sweat value can create unfair ownership.
3. What does the risk multiplier do?
The risk multiplier increases contribution value for uncertain or early stage involvement. It should be agreed by all partners. A high multiplier can strongly increase ownership.
4. Why include future dilution?
Future dilution estimates ownership loss from later funding, option grants, or new investors. It helps show a more realistic long term partner percentage.
5. What is vested equity?
Vested equity is the portion earned after completing required service time. If the partner has not passed the cliff period, vested equity may be zero.
6. Should profit share always equal equity share?
Not always. Some agreements separate ownership from profit distribution. This calculator estimates profit share from final equity, but partners may use a different written agreement.
7. Why calculate shares to issue?
Share issuance converts percentage ownership into a practical number of shares. It helps founders see how many new shares may be needed for the partner.
8. Is this a legal valuation tool?
No. It gives a structured estimate for planning. Use a qualified adviser for legal documents, tax issues, securities rules, and formal valuation work.