The concept of sweat equity was first employed in the United States by the American Friends Service Committee in the Penn Craft self-help housing project beginning in 1937.
[3] Recent data has shown the sweat equity in the private business sector equals 1.2 times the U.S. GDP.
Theories have been put out to the public to say that lowering income tax rates on private businesses is significantly understated when considering smaller firms' sweat equity effects.
[1] Sweat equity shares can be used as motivation for the startup's employees and will create a more level playing field against large corporations.
The “Slicing Pie” model, outlined in Mike Moyer's 2012 book Slicing Pie: Funding Your Company Without Funds, outlines a formula based entirely on sweat equity by observing the relative value of each person's unpaid fair market compensation and reimbursement.