Dynamic equity is a category of equity allocation model where ownership percentages are not fixed at a point in time but instead float based on ongoing contributions. The underlying logic is simple: if two people are building a company together, the person contributing more at any given moment should own more. Dynamic equity provides the mathematical mechanism to implement that principle consistently.
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Contributions are grouped into types — typically time (hours worked), capital (money invested or at risk), intellectual property (code, patents, trade secrets), and in-kind resources (equipment, software licenses). Each type is assigned a rate and a multiplier reflecting the risk taken. Cash put in as equity typically earns a 2× multiplier because the contributor absorbs full downside risk with no guarantee of repayment.
| Contribution type | What it covers |
|---|---|
| Time | Hours worked |
| Capital | Money invested or otherwise at risk |
| Intellectual property | Code, patents, trade secrets |
| In-kind resources | Equipment, software licenses |
Each type carries a rate and a multiplier reflecting the risk taken.
Multipliers make dynamic equity fair across contribution types. A founder working full-time for zero salary is taking on significant opportunity cost risk — their hours earn a higher multiplier than a part-time advisor billing at market rate. Equafy lets you configure multipliers per contribution type for your team, rather than applying a generic default across every input.
Multipliers are what make it fair
A founder working full-time for no salary is absorbing real opportunity cost, so their hours should not earn the same as a part-time advisor billing at market rate. Equafy lets you set the multiplier per contribution type instead of applying one generic default.
A pure dynamic equity arrangement is a pre-money structure. When a company raises investment or reaches a predetermined milestone, it's common to reconcile the dynamic model into a fixed cap table. Each founder's accumulated percentage becomes their permanent equity stake. After reconciliation, the fixed cap table is managed like a traditional one. Equafy's Issue Shares feature handles the conversion workflow with a full audit trail.
Not every founder needs to participate in the dynamic pool. Equafy supports a hybrid model: some members have fixed equity (a guaranteed percentage regardless of ongoing contribution), while others participate in the dynamic pool. This is useful when one cofounder brings a significant upfront asset warranting guaranteed equity, while others contribute primarily through ongoing work.
Slicing Pie is the most well-known dynamic equity framework, but dynamic equity is the broader category. Equafy's dynamic equity engine is inspired by Slicing Pie but fully configurable.
Theoretically yes, but institutional investors require a fixed cap table. Most teams run dynamic equity through the bootstrapping phase and convert at a funding event.
Equafy sums each member's risk-adjusted contributions and expresses each member's total as a percentage of the whole team's total. The calculation updates every time a new contribution is logged.
Equafy's dynamic equity engine tracks every contribution and calculates fair ownership automatically — no spreadsheet required.
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