Sweat equity (also often referred to as founder compensation in German)

Company shares which the founder receives as compensation for his successful work (the efforts put into a start-up company by the founders in exchange for ownership shares of the company, also called “shares for services” and sometimes “equity compensation”). As a rule, these shares are transferred on exit; not infrequently also with the hidden intention of persuading the founder to leave after reaching the break-even point (the point at which the income from sale of a product or service equals the invested costs, resulting in neither profit nor loss; the stage at which income equals expenditure). – Incentive compensation in the form of shares in the company for management (shares allocated to the management as an additional motivation for continuing hard work for the firm’s success). – In the case of a home in need of repair, the work performed by the owner (a contribution to the value of real estate in the form of labor provided or services rendered; sweat equity is normally associated with someone who purchases property that needs work). – See bonus, buy-out, third-phase financing, family and friends capital, seed capital, squeeze-out, transaction bonus.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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