Article · 7 min read

The Magic of Multipliers

Mike Moyer · Slicing Pie Free Beginner

This is the cleanest statement of your core thesis: money in and sweat in are different instruments. Slicing Pie prices cash at a 4x multiplier and time at 2x precisely because a rupee out of your bank is riskier and scarcer than an hour of work, which is the reasoning that stops a 5 lakh cheque from silently becoming 30 percent of the company.

  • Cash contributions carry a 4x risk multiplier and non-cash (time, ideas) a 2x, because real money out of pocket is scarcer and riskier than sweat.
  • Treating cash and sweat as separate, differently-priced inputs is what keeps one founder's cheque from swallowing the cap table.
  • The multiplier logic gives you a defensible, non-arbitrary way to explain to a co-founder why their cash is repaid or converts, not just gifted equity.
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The question it answers

  1. Should co-founder equity be split before or after we have raised any money, and does it matter that one of us is putting in cash?

Read with it

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  2. Most equity-split writing is American and ignores that India has no 83(b) election and its own sweat-equity rules. This chapter... Swimming With Sharks (Indian founder funding guide) Book · 30 min read Co-Founder Equity Splits and Vesting (The Founder's Guide to Startup Funding: Protecting Your Interests in the Indian Ecosystem) Swimming With Sharks
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