Building the Company
Fund Your Company Without Funds
A dynamic, contribution-based way to split founder equity before there is money to pay anyone, with clear rules for when people leave.
The big idea
Moyer argues that fixed equity splits agreed on day one are guesses about future contributions, and those guesses are usually wrong. His alternative, the Grunt Fund, tracks every unpaid contribution of time, cash, equipment or relationships at fair market value, weights it for risk, and gives each person a share equal to their portion of the total. The split adjusts as work happens, then freezes into a normal cap table once the company can pay people or raises a priced round.
Key takeaways
An equal split on day one assumes everyone will contribute equally for years. In practice one person goes part-time, another puts in cash, a third leaves. The frozen split then feels unfair to someone, and resentment or legal fights follow. Moyer compares it to splitting gambling winnings evenly when the players bet very different amounts.
In the Grunt Fund, each uncompensated contribution earns slices. Your share at any moment is your slices divided by all slices. Because it updates as contributions land, nobody has to renegotiate when roles change; contributing more simply raises your share. The model applies to time, cash, supplies, facilities, ideas that become real work, and introductions that produce results.
Non-cash contributions, such as unpaid salary, are multiplied by two; cash is multiplied by four because it is scarcer and more directly at risk. The multipliers convert very different sacrifices into a single unit so they can be compared fairly. The higher weight on cash reflects that money handed over is gone if the company fails, while forgone salary was never received in the first place.
Each contribution is priced at what it would cost on the open market: time at the salary the person could realistically earn elsewhere, minus any pay received; space at its rental rate; equipment at its value. Using observable prices turns arguments about who matters more into arithmetic. An idea alone, without the work to develop it, earns modest credit.
Moyer's recovery rules address dead equity. If someone is let go without cause or resigns for good reason, they keep their slices. If they are fired for cause or quit without good reason, they lose their non-cash slices, and the company can buy back cash contributions. This prevents an early departure from holding a large stake while others build the value.
The dynamic model is meant for the period before the company can pay market compensation. When it reaches breakeven or raises a meaningful priced round, contributions are no longer at risk, so the split freezes and converts to standard shares with vesting. Every percentage on the resulting cap table has a documented history behind it.
The framework
| How the person leaves | Non-cash slices | Cash slices |
|---|---|---|
| Terminated without cause | Kept | Kept |
| Resigns for good reason | Kept | Kept |
| Terminated for cause | Forfeited | Company may buy back at cash value |
| Resigns without good reason | Forfeited | Company may buy back at cash value |
Apply it this week
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This page is an original summary and commentary prepared by XRAYCLOUD.AI with AI assistance. It is not affiliated with or endorsed by the author or publisher, and it is no substitute for the book — read it for the full argument.