A dynamic equity split gives each founder ownership based on what they actually contribute over time, instead of a fixed percentage set on day one. As you add time, cash, ideas or equipment, your share moves. The best-known version is Mike Moyer's Slicing Pie model. It suits bootstrapped teams with unclear roles and must be fixed before you raise money.
How does a dynamic equity split work?
A fixed split is a guess about who will matter most over three years. A dynamic split skips the guess. You record contributions as they happen and let ownership follow. The Slicing Pie model, from Mike Moyer's 2012 book, turns every input into a unit called a slice. Your share is your slices divided by all slices (Equity Matrix).
How are slices weighted?
By how hard each input is to get back. Cash is harder to recover than time, so it earns more. Moyer's rates (Equity Matrix):
| Contribution | Multiplier |
|---|---|
| Unpaid time | About 2x the fair market value of the work |
| Below-market salary | About 2x the gap between market rate and actual pay |
| Cash invested | 2x to 4x |
| Equipment and supplies | About 1x, at fair market value |
| Intellectual property | 1x to 2x, based on what it cost to develop |
Is a dynamic split better than a fixed split?
Neither is fairer in itself. They fail in different ways.
| Fixed split | Dynamic split | |
|---|---|---|
| Best for | Clear roles, proven commitment, a raise coming | Bootstrapped, unclear roles, pre-funding |
| Strength | Simple, clean cap table, ready for investors | Follows the real work, cools "who earned what" fights |
| Weakness | Rewards the plan, not the work; goes stale | Heavy record-keeping; ideas hard to price |
| When a founder leaves | Vesting takes back unearned shares | Earned slices stay unless the terms say otherwise |
The strongest argument for dynamic equity is fewer fights. One attorney reported in Forbes that before using the model, at least half of the founding teams he advised had an equity dispute within the first year, and that Slicing Pie "virtually eliminated" them. When ownership follows contribution, the record answers the question before anyone argues it.
What are the downsides of Slicing Pie?
- Record-keeping. Someone must log every hour and expense. Many teams start strong and stop within months, and then the split is fiction.
- Pricing ideas. Time and cash have market rates. Ideas and relationships do not, and pricing them brings back the arguments the model was meant to end.
- Early leavers. The base model has no cliff. A founder who works two months and walks keeps their slices unless your agreement recovers them (Equity Matrix). You still need a vesting schedule.
- Investors. Institutional money will not buy into a split that keeps moving, so you freeze the pie before a priced round (Equity Matrix).
- No contract. The model gives you the maths. Enforceability depends on the agreement you sign around it. Our founders agreement templates give you a starting draft.
Should your startup use a dynamic equity split?
Use it if you are bootstrapped, roles are unclear and nobody can say yet who will carry the load. Choose a fixed split if roles are settled, commitment is proven or a raise is close. Many teams do both: dynamic while bootstrapping, fixed at an agreed trigger.
Either way, write down the multipliers, the exit terms and the event that freezes the pie, and pair it with vesting. To weigh the thinking behind the split itself, read fair vs equal cofounder equity and how to split cofounder equity.
Frequently asked questions
- What is a dynamic equity split?
- A dynamic equity split gives each founder ownership based on what they actually contribute over time, instead of a fixed percentage agreed on day one. As founders add time, cash, equipment or ideas, their share adjusts. The best-known version is Mike Moyer's Slicing Pie model, built for the early, unfunded stage of a company.
- How does the Slicing Pie model work?
- Every contribution is converted into a unit called a slice, and your ownership is your slices divided by all slices. Inputs carry different multipliers. Cash earns more than time because money at risk is the hardest thing to get back, so a founder who invests cash earns slices faster than one who invests hours.
- Do investors accept the Slicing Pie model?
- Not as a live arrangement. Venture investors expect a clean, fixed cap table. Slicing Pie is meant for the bootstrapped, pre-funding phase. Before a priced round, the founders freeze the pie into fixed percentages at an event they agreed in advance, and normal vesting takes over from there.
- What are the downsides of a dynamic equity split?
- Someone has to log every hour, expense and contribution, and many teams stop within months. Ideas and relationships are hard to price, which brings back the arguments the model was meant to end. Founders who leave early can keep earned slices unless the agreement says otherwise, and the split must be fixed before raising.