Equity Distribution
We Implement the Slicing Pie Model for Fair Equity Allocation
The Slicing Pie model is your solution for achieving a truly equitable distribution of equity within your early-stage, bootstrapped startup. It's a universal, one-size-fits-all model that creates a perfectly fair equity split. The core principle is straightforward: a person's percentage share of equity should always align with their share of at-risk contributions.
At-risk contributions encompass a wide range of valuable inputs such as time, money, ideas, relationships, supplies, equipment, facilities, or any other non-monetized support provided to the company. This dynamic model adjusts in real-time to ensure fairness as contributions evolve.
Contributions come in two fundamental types: cash and non-cash. Non-cash contributions, like unpaid time, are just as important as cash contributions, such as unreimbursed expenses. Slicing Pie standardizes both cash and non-cash contributions, converting them into a fictional unit called a "Slice," much like a poker chip.
Individual Equity Share = Individual Slices ÷ Total Slices
This formula provides a perfect equity split at any given moment, adapting as your venture progresses. It remains in effect until your company achieves breakeven or secures sufficient capital to compensate participants for their contributions. At this point, the equity split becomes static and determines how dividends or proceeds from a sale are distributed.
Slicing Pie not only ensures an equitable equity split but also aids in calculating a fair buyout price when a team member departs before breakeven. This model is embraced by entrepreneurs worldwide, and the resources below offer comprehensive guidance on implementing it effectively in your company. Slicing Pie is, without a doubt, the fairest way to allocate equity.
Always 100% Fair
The Slicing Pie model is anchored in real-world events and automatically adapts to maintain fairness over time, regardless of evolving circumstances. Our founder startup calculator aids in determining the value of your founder equity and equitably allocating equity among founders, employees, and partners.
Managing Your Equity Split is as Easy as Pie
Our Pie Slicer software simplifies the process of keeping track of your equity split. Slicing Pie's equity allocations evolve in response to participants' contributions of time, money, ideas, relationships, facilities, supplies, equipment, or any other essential resources your company relies on.
The Pie Slicer follows the Slicing Pie formula
Slicing Pie is a universal formula for creating a perfectly fair equity split in an early-stage, bootstrapped startup. Traditional, old-fashioned equity splits are based on guesses about the future, negotiation skills and rules-of-thumb. The Slicing Pie model is different because it's based on what participants actually contribute over time.
The Pie Slicer applies the Slicing Pie formula as outlined in the book Slicing Pie and The Slicing Pie Handbook.
Keep track of what people actually contribute.
The Slicing Pie Pie Slicer application will help you and your team keep track of your individual contributions and calculate the pie based on the calculations in Slicing Pie. Keep track of time, expenses, supplies, equipment, royalties on ideas, commissions on sales and any other contribution an individual could make.
Contributions can be set to repeat at regular intervals. Set a monthly rent contribution or a weekly payroll, for instance.
Manage access and monitor contributions.
Team members can submit their own contributions through their own account. Pie administrators can manage what individual users can see or do in the Pie Slicer. For instance, the Employee setting allows the user to see only their own contributions while the Executive setting allows the user to see all contributions.
Pie administrators can allow someone to enter contributions directly or require approval before slices are added.
Track direct cash investments with the Well.
The Well feature allows the team to track cash investments in the company. When money is invested it is held in the Well. When money is drawn from the Well to cover company expenses, the Pie Slicer allocates slices to each participant in the Well according to their share.
The Well helps prevent unnecessary equity allocations by only calculating slices when investment funds are consumed.
Customize variables based on your company's policies.
The Pie Slicer's default settings are set to reflect best practices for fairness as outlined in the Slicing Pie books. However, variables can be changed to reflect your industry norms or company policy.
For example, Pie administrators can edit commission and royalty rates, set up their own project categories or determine how to calculate mileage rates.
Make due diligence a snap.
The Pie Slicer includes logs, reports and charts based on the team's contributions providing valuable insight for managers and potential investors.
Gain a deeper understanding of how your team is spending their time, investing their cash, and consuming other inputs such as supplies or equipment.
Handle departures fairly while protecting the interests of the company.
When someone leaves the company, the Pie Slicer will help calculate the fair buyout price and re-allocate slices depending on the circumstances of the separation.
Slicing Pie protects the interests of both the company and the individual employees. Being fair to ex-employees is as important as being fair with employees.
Your cap table is always fair!
With Slicing Pie, your cap table always shows the fairest split no matter what changes. All other models and online tools create one-off, fixed equity splits based on estimates and guesses.
Slicing Pie is the only equity model that guarantees a perfectly fair split.