How FairSetup works

True ownership has two parts: a say in decisions, and a claim on the value the venture creates. FairSetup distributes that ownership in proportion to impact — each partner's measurable contribution to the whole.

To make very different contributions comparable, everything is translated into one common denominator: money. Hours worked, deliverables shipped, and cash invested are all expressed as a dollar impact, so they can be added up and compared on equal terms.

Impact from labor combines two things: effort (time spent) and results (what that time produced).

Effort starts from an impact-per-hour rate. In the live system that base rate is derived from a person's reference salary spread across a working year:

That rate is then adjusted by performance, which is self-assessed, peer-reviewed, and confirmed by the team. A results multiplier reflects how the work landed — roughly: met expectations 100%, minor follow-up needed 90%, significant rework 60%, substantial rework 30%, unused 25%, with a bonus band for standout impact.

Put together, the labor impact for a cycle is:

Hours come straight from the built-in time tracker; flat and commission cover ad-hoc or sales-based contributions.

Capital is simpler. Cash a partner puts in is impact at face value — no performance or timing multipliers. A dollar invested is a dollar of impact.

The mirror of this is out-vestment: value a partner pulls back out (an hourly draw, a flat amount, or a cash commission) is subtracted at face value. Taking a cash commission also creates an equal equity entry — a commission match — so choosing cash now versus equity stays balanced.

Each evaluation cycle adds one impact event to a partner's history. Their ownership at any moment is their share of all impact ever created:

Because the denominator includes everyone, your percentage moves as the whole team contributes — ownership is always relative to the value the venture has created together.

Building something when it's fragile and unproven is a bigger bet than contributing once it's established — and the model reflects that. As the venture de-risks, the valuation increases thereby increasing the value of labor during the earlier phases of the venture.

So the partner who “started the business when there was nothing” keeps credit for the risk they took, even as later contributions pile up.

Periodically the team runs a long cycle — a settlement that values the labor done up to that point at an agreed multiplier. It applies only to the labor side; cash a partner already took out is never inflated or shrunk by it.

There are a few ways value comes back to partners:

• Normal distribution — revenue is offered to everyone without changing the valuation, at normal (or minimal) dilution.
• Dilutive distribution — the valuation is reduced, so partners who take the distribution accept more dilution in exchange.

Partners can also sell their position to an outside buyer, or share in the proceeds if the company is sold.

The algorithm produces a number, but the team treats it as one input, not the final word. Each contribution is sanity-checked by triangulation across four views:

1. Impact value of the effort (the FairSetup calculation)
2. Market rate for that effort (what comparable work pays)
3. Market rate of the deliverable (cost to buy the output)
4. Impact value of the deliverable (revenue it generates)

The team agrees the final impact after weighing these together — the math informs the decision rather than dictating it.

Each evaluation cycle follows a simple, accountable loop: a partner self-assesses (time, what they did, performance), peers review, and the team confirms at a meeting. FairSetup keeps the time tracking, the self-assessment, the math, and the running equity picture all in one place.