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Slices vs. Theoretical Value

Posted by on Oct 31, 2014 in Blog | 0 comments

It’s important to know that a company’s value is not equal to the sum of the inputs. In other words, if I provide time, ideas and equipment worth $1,000, this doesn’t mean the company is worth $1,000. In most cases the value of a startup company is closer to zero. In all cases we hope it is worth much more than the inputs. Implying a valuation means the underlying shares in a company also have value. This has meaningful tax implications and potential legal implications. It’s important, therefore, to understand that keeping track of contributions is simply a method used...

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Seed Stage Investments and the Well

Posted by on Oct 31, 2014 in Blog | 0 comments

Slicing Pie allocates slices of the pie when contributions to the company are put at risk. When you spend an hour working on company affairs, for instance, you are taking a risk that you will never get paid for your contribution. The amount of that risk is equal to the amount you would have otherwise been paid for the same contribution to a company that had the money to pay you. This is the fair market value of your time. All contributions have a fair market value and this serves as a basis for the calculations of slices in the pie (also known as theoretical value). In the Slicing Pie model,...

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The Magic of Mutipliers

Posted by on Oct 31, 2014 in Blog | 0 comments

For the Slicing Pie model, I recommend a non-cash multiplier of two (2) and a cash multiplier of four (4). Non-cash contributions include time, ideas, relationships and anything else that can be contributed without spending actual cash. Cash contributions include cash (when spent) and un-reimbursed expenses. These numbers are set based on my personal experience with the model and they are important. There is no science or special math behind them, but I encourage you to resist the urge to change them! The multipliers make the model work. Without them, you will be less successful in achieving...

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An Interview with Mike Moyer about Equity Splits

Posted by on Oct 2, 2014 in Blog | 0 comments

This video is part of a series called the Art of Dealmaking created by Fundology.com.

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Slicing John’s Bicycle Attic

Posted by on Sep 20, 2014 in Blog | 0 comments

In the book, Slicing Pie, there is a case study called John’s Bicycle Attic. The case covers a fictional business and how the managers used the Slicing Pie method for allocating equity. Below is a demonstration of how the case plays out using the online Pie Slicer application. To download a copy of the case click here. Also, the case in the book has some mistakes. The case has been updated and will appear in future versions of Slicing...

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Slicing Pie at Campus Party in Colombia

Posted by on Sep 19, 2014 in Blog | 0 comments

One of my readers forwarded me a link to a video of Edward Ramirez presenting Slicing Pie in Spanish. Gracias!

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