Is Sweat Equity Worth Anything? (Part 1 of 3)

I’m not an attorney, but I’ll use their two favorite words: it depends.

Most people are familiar with the term ‘sweat equity,’ but let’s start there if you’re not. From Investopedia:

Sweat equity originally referred to the value-enhancing improvements generated from the sweat of one’s brow. So when people say they use sweat equity, they mean their physical labor, mental capacity, and time to boost the value of a specific project or venture. In cash-strapped startups, owners and employees typically accept salaries that are below their market values in return for a stake in the company, which they hope to profit from when the business is eventually sold.

This isn’t the end-all-be-all definition, but there are some interesting concepts I think directly map back to the original question: is sweat equity worth anything? Let’s address them below.

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