Slicing Pie is a remarkable and revolutionary book written by Mike Moyer that lays out the general principles of implementing a dynamic and fair equity split for your start-up. It is a simple formula based on the principle that a person’s % share of the equity should always be equal to that person’s share of the at-risk contributions.
While Slicing Pie as a methodology is not complicated, the current legal and tax framework in the United States is not geared towards dynamic equity. Thus there are several perils in its legal implementation that a majority of attorneys are not familiar with. The good news is that you have come to the right place. The attorneys at Sentient Law, Ltd. have over a decade of experience with Slicing Pie, dynamic equity, and dynamic revenue and are regularly retained to assist and counsel on these matters by other attorneys and firms.
How does Slicing Pie and dynamic equity work?
All contributions to a startup are tracked in an formulaic fashion. At-risk contributions include time, money, ideas, relationships, supplies, equipment, facilities, or anything else someone provides without full payment of its fair market value. Every day people contribute more and more to a company in hopes that it will someday generate a profit, go public, or sell. Because contributions are constantly being made, the model is dynamic. It self-adjusts to stay fair.
There are two basic types of contributions. Cash contributions consume cash, non-cash contributions do not. Time, for instance, is a non-cash contribution whereas a reimbursed expense is a cash contribution. Slicing Pie normalizes cash and non-cash contributions by converting to a fictional unit called a “Slice”. A slice represents a normalized at-risk contribution. A slice is kind of like a poker chip.
An individuals % share = individual’s Slices ÷ all Slices
At any given time, the above formula will provide a perfect equity split. The formula applies until the company breaks even or raises enough capital to pay participants for their contributions. At this point, the split “freezes” and subsequently determines the distribution of dividends or the proceeds of a sale.
Not only does Slicing Pie determine a perfect equity split, but also it will help you calculate a fair buyout price if any when someone leaves the company before breakeven.
Choose Matt Rossetti as your ‘Slicing Pie’ Lawyer.
Matt Rossetti has used the framework of Slicing Pie and other dynamic equity models thousands of times. His unique understanding of the model, its tax consequences, and venture finance enables him to craft a custom dynamic equity agreement that will be perfect for your intended results. Schedule a free consultation to discuss an engagement here: https://calendly.com/sentientlaw/dynamic-equity-free-consultation
Profitable or Past Breakeven? Dynamic revenue and dynamic profit sharing may be the solution for your business.
Sentient Law, Ltd. has expanded on the dynamic model so that it can work for profitable, post-revenue companies too. Schedule a free consultation to discuss an engagement here: https://www.sentientlaw.com/free-consultation/.
Slicing Pie is used by entrepreneurs all over the world and is the fairest way to split equity on the planet. Interested in learning more? Pick up your copy of Slicing Pie on Amazon.com today!
Paperback: Slicing Pie Handbook: Perfectly Fair Equity Splits for Bootstrapped Startups
Kindle: The Slicing Pie Handbook: Perfectly Fair Equity Splits for Bootstrapped Startups
