Slicing Pie

            Non-Cash Contributions

            A non-cash contribution is pretty much anything that an individual contributes without an outlay of cash. Time is an example of a non-cash contribution. There are no direct expenses associated with the time I spend working on a startup. Similarly, there are no direct costs associated with introducing the company to a qualified prospect I might know.

            Many startups can be built with mostly non-cash contributions—often referred to as “sweat equity”. A tech startup, for instance, may be able to be created without spending a dime. In fact, the real beauty of the Slicing Pie Method is its ability to fairly account for non-cash contributions and use slices to reward the people who made them. Most companies, however, will require a mix of cash and non-cash contributions to be successful.

            To convert non-cash contributions into slices, use the following calculation: 

            Slices = Fair Market Value of Contribution x Non-Cash Multiplier 

            For this to work, however, you need to have a way of determining the fair market value of the contributions.

            Updated: 04 Apr 2016 11:22 AM
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