A method for splitting ownership based on real contributions over time, not guesses upfront. Ownership adjusts as people add time, cash, revenue, or other measurable value. Must be converted to a fixed cap table before raising institutional funding.
Why it matters
Dynamic equity solves the fundamental problem with static splits: you can't predict the future. Instead of locking in percentages on day one, ownership reflects what people actually contribute over time. This eliminates the resentment that builds when contributions diverge from ownership.
How it works
In a dynamic equity model, each contributor's time and cash are tracked at agreed-upon rates. Your ownership percentage at any point equals your share of total contributions. If you've put in 60% of the total value, you own 60%. When someone new joins, their contributions get added to the pool and everyone's percentages adjust naturally. When you're ready to raise or formalize, you convert the dynamic split to a fixed cap table. For example, three co-founders tracking over six months might end up at 45/35/20 instead of the 33/33/33 they would have guessed on day one.
Learn more
- Dynamic vs. Fixed Equity
- How to Split Equity in a Startup
- Slicing Pie Guide
- Converting a Dynamic Split to a Fixed Cap Table
Related terms
Try dynamic equity for your team
Equity Matrix makes contribution-based equity simple.
Get Started Free