Calculating For Cash

People are much more likely to provide ingredients like equipment or time than money so an extra incentive is preferable for those who provide cold, hard cashola. If a Grunt provides small amounts of working capital, pays for services (like corporate formation), or covers material out-of-pocket expenses for which no reimbursement will be received, the theoretical value is the value of the cash or credit used times four. Cash contributions are weighted heavily in a formation-stage company for several reasons:

  • First, it is much harder for a Grunt to replace the cash when he or she is in the process of starting a company.
  • Next, all businesses need cash to survive. No cash = No business
  • Lastly, weighting cash heavily allows founders to buy and maintain a big chunk of their own business during the early days.