equitybased on the Slicing Pie model, is time converted into money which is converted into equity based on the market hourly rate for an employee/freelancer of a similar position/assignment at that point in time?
Equity is typically valued on what a person brings to the table. The type of business and a person’s perceived value to it, generally are markers for determining equity. In an hard asset business, the lion’s share typically goes to the person who funds it. When it is a soft (intangible) asset business, the lion’s share goes to the idea/developer person. Frequently equity in startups has a vesting period. In other words, someone may “own” a chunk of a company on paper, but it is not really theirs until a time down the line when they have “earned” it.
Irreplaceable people usually get more equity than replaceable people. And that’s the way it should be. In a startup, there would be no business at all without the irreplaceable people. Thus, the “pie is sliced” based on the “relative value” of a person “to THE company”. The relative value of each person may be different to different companies. However, when equity is divided, it is to a single (THE) company.
The is more detail about “slicing the pie” equity division here.
http://slicingpie.com/how-to-use-a-dynamic-equity-split-program-so-everyone-gets-what-they-deserve/
http://tech.co/slicing-pie-dividing-up-early-stage-startup-equity-2012-09
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