Sweqlink | How much equity should I ask for?

There is no single number, but there is a method for working out, roughly, how much equity you should ask for in a startup. Work out what your time is worth at market rate, take off any cash you are being paid, and express what is left as a share of what the company is worth today. Then adjust for risk and vesting. For part-time contributors in early-stage ventures, that could be anywhere from less than 1% to 50%. Role, hours and stage move it a lot, so the rest of this page shows you how to factor them in.

What drives the number

Five things move the answer more than anything else.

Cash alongside equity. The more you are paid in cash, the less equity you need to ask for.
Hours and duration. A day a week for six months is a different deal from ten hours a week for two years.
Stage and risk. Equity in a company with no revenue is worth less today than equity in one with paying customers, and it may end up worth nothing.
Seniority and scarcity. Specialist skills that are hard to hire carry more weight than general support.
Vesting and cliff. When you actually earn the equity matters as much as how much there is.

A simple method

Here is a method you can run on the back of an envelope. It is crude and only indicative, but you can treat the output as your opening position in a negotiation.

Value your time. Hours committed, multiplied by what you would charge on the open market.
Subtract any cash. Whatever the founder pays you comes off the total.
Agree what the company is worth. Use the last priced funding round if there is one. If there is not, agree a working figure with the founder and write it down. Founder Catalyst has an overview of where to start with this.
Turn the remainder into a percentage. The remaining value divided by the company value gives your starting share.
Adjust for risk and vesting. Early equity can end up worth nothing, so many people ask for more than the raw figure. Vesting means you earn the equity over time rather than on day one.

Worked examples

These figures are illustrative. Swap in your own hours, rate and company value.

Role	Commitment	Market rate	Cash paid	Agreed company value	Starting share (before risk and vesting)
Fractional marketing lead	1 day a week for 6 months (about 26 days)	£400 a day	£0	£500,000	About 2.1%
Part-time developer	2 days a week for 12 months (about 104 days)	£450 a day	£15,000	£750,000	About 4.2%
Adviser	1 day a month for 12 months (12 days)	£750 a day	£0	£1,500,000	About 0.6%

If you are joining at idea or concept stage, you would want at least double your rate in the value of shares, which would take the marketing lead's 2.1% to around 4.2%. When you work for equity, you're not just swapping hours for shares in the business. You're sharing a risk with the founder, and risk has a price. We unpack this further in our Equity vs Day Rate explainer.

Try the calculator

Put in your own figures. It runs the same method as the table above and gives you a range rather than a single number: the bottom is your time at market rate, the top prices it at three times that rate for the risk.

Questions to ask the founder

A fair arrangement should feel clear to both sides. If a founder cannot explain how they reached their offer, that is worth a conversation before you say yes.

How did you arrive at this offer?
What company valuation is it based on?
Is it shares or options, and what rights come with them?
What is the vesting schedule, and is there a cliff?
What happens to my equity if I leave, or if the company is sold?
How might future funding rounds dilute my share?

Common questions

Is there a standard percentage for sweat equity?

No. Any figure quoted without the role, hours, cash and company stage behind it is a guess.

Can I ask for cash and equity?

Yes. Many arrangements mix the two, and the cash you receive reduces the equity you need.

What is vesting, and what is a cliff?

Vesting means you earn your equity over time instead of receiving it all up front. A cliff is a minimum period you have to complete before any of it vests.

How do I value equity if the company has no revenue?

Agree a working valuation basis with the founder and write it down. A last funding round, a comparable company or an agreed figure can all work, as long as both sides can explain it.

Should I ask for shares or options?

Shares give you ownership now. Options give you the right to buy shares later at a set price. Which suits you depends on the structure and your tax position, so take advice.

Is sweat equity taxed?

Yes, but only when you receive shares as payment (or when you exercise options). In HMRC's eyes, shares given in return for work are a form of payment: if the company is valued at £500,000 and you receive 2%, HMRC can treat that as £10,000 of income. Most founders give options instead of shares. An option is the right to buy shares later at a price you fix today. There is no tax when the option is granted. It is due when the option is exercised, and you can set it up so that only happens when the company is sold. That way the tax bill arrives at the same time as the money to pay it.

Want a second pair of eyes?

Equity is harder to price than a day rate, and benchmarks are hard to find. The deep dive is a one-hour session with someone experienced in sweat equity arrangements. You'll talk through your situation together, so you leave with a clearer sense of what a reasonable ask could look like and what to raise with your own legal and tax advisers.

Not ready for that? A 20-minute discovery call is a lower-commitment way to talk it through.

Book a discovery call

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Written by Graeme Goulden

Fractional CPO and Sweat Equity investor at Sweqlink, Co-host of A New Work Order Podcast
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Sweqlink provides general information only. Nothing here constitutes legal, tax or financial advice. Seek independent professional advice before entering into any agreement.