Time Is Startup Capital Too

Most startup equity discussions are built around one kind of capital: money.

That makes sense. Startups need capital. Investors take risks. Founders need cash to hire, build, survive, and grow. Without financial capital, many ambitious companies simply cannot exist.

But there is another scarce resource invested in startups every day: time.

Not abstract time. Not “effort” as a vague moral category. Real time. Years of a person’s life spent building a product, supporting customers, carrying technical debt, improving quality, making hard tradeoffs, and keeping the company alive.

Money finances the company.

Time builds it.

And yet, in many startup structures, the economic upside still follows financial capital far more clearly than it follows the time spent creating the actual value.

This article is a proposal, not a finished legal model. I am writing it to start a conversation with founders, lawyers, investors, and operators who might be interested in designing a more precise version.

The question is simple:

Can we build startup structures that remain legible to investors, while sharing value more fairly with the people who spend years building the company?

The problem with the usual startup story#

The common startup story says: everyone is in this together.

Founders take the first risk. Investors provide capital. Employees join the mission. If the company succeeds, everyone benefits.

Sometimes that is true.

But often, the distribution of upside does not reflect the distribution of time, energy, and risk across the company’s life.

A startup can be built over seven or ten years by a whole team. Early employees may carry critical parts of the product, customer relationships, operations, design, infrastructure, sales, support, and culture. They may stay through uncertainty, pivots, stress, and long periods where nothing looks certain.

Then, when the company is sold, most of the value may still flow to the holders of financial capital: founders and investors.

This is not always malicious. It is mostly structural.

The legal and financial architecture knows how to recognize money. It knows how to recognize shares. It knows how to recognize liquidation preferences, vesting, option pools, and cap tables.

It is much less precise at recognizing the cumulative time spent building the company.

This is not an anti-investor argument#

This proposal is not anti-investor.

A startup that wants to pay good salaries, hire strong people, and grow fast may need outside capital. Investors who provide that capital take real risk. They deserve a clear economic framework.

The goal is not to make startups uninvestable.

The goal is to ask whether we can design a model where:

• financial capital keeps a clear and investor-friendly role;
• salaries remain aligned with the market;
• founders and executives remain able to govern the company;
• but the value created by the company is shared more fairly with the people who invested their time.

In other words, this is not a proposal to replace venture capital.

It is a proposal to make startup ownership more honest about where value actually comes from.

A dual-capital startup model#

The model I am exploring is a dual-capital startup model.

It separates two forms of capital:

1. Financial capital — Money invested into the company by founders or external investors.
2. Time capital — Time invested by the people who build the company from the inside.

Financial capital remains recognizable. If an investor puts money into the company at a given valuation, they receive a clear economic share.

For example, if an investor puts in €1M at a €10M post-money valuation, they own 10% of the economic value.

That part should stay simple.

The question is what happens to the remaining 90%.

In a conventional company, it usually belongs to the existing shareholders according to the cap table.

In a dual-capital model, the internal share of value could be distributed according to time capital: the accumulated contribution of the people who actually built the company.

This does not mean everyone owns everything equally.

It means that, inside the internal block, value is shared according to a transparent formula based on the time and energy invested.

Time is not just labor cost#

A salary pays for work now.

But in a startup, especially an early-stage one, people often create value whose financial result appears much later.

A technical decision made in year one can create value in year six.

A customer relationship built in year two can matter at exit.

A product architecture decision, a brand decision, a quality decision, a support culture, or a distribution insight can compound for years.

If the value arrives late, a purely salary-based model misses part of the story.

This is why time capital matters.

It says:

If you spend years building the company, your contribution should not disappear just because the company only becomes valuable later.

How time capital could work#

The simplest version would track time contributed by internal contributors each year.

A full-time year might be 100 points. A half-time year might be 50 points. Other contributions could be proportional.

But raw time is not enough.

An hour spent in a company of two people is not the same as an hour spent in a company of fifty people. Early contributors often work in conditions of higher uncertainty, higher ambiguity, and higher personal exposure.

So the model can add what I call a craft coefficient.

The idea is to measure how “artisan-like” the company still is in a given year.

A year carried by one or two people is structurally different from a year carried by an already staffed company.

One possible formula:

craft coefficient = max(0.14, 1 / sqrt(n))

Where n is the average number of internal contributors during the year.

This gives:

• 1 contributor → 1.00
• 2 contributors → 0.71
• 3 contributors → 0.58
• 4 contributors → 0.50
• 9 contributors → 0.33
• 16 contributors → 0.25
• 49 contributors → around 0.14

The floor at 0.14 means that, around 50 contributors, the company is considered staffed enough that one more person no longer changes the “craft” nature of the organization very much.

The score becomes:

yearly score = time invested × craft coefficient

Then each person’s accumulated time-capital score determines their share of the internal value pool.

This is not the only possible formula. It is just one candidate. But it has one advantage: it rewards early risk without making the first contributors permanently untouchable.

Try the simulator#

I built a small simulator to make this model easier to explore.

It lets you adjust the number of contributors, yearly time commitments, founder advances, deferred compensation, funding assumptions, and exit scenarios, then see how the internal time-capital distribution evolves.

Open the simulator

Why not use time decay?#

One alternative would be to make old contributions decay over time.

For example, a contribution from this year counts 100%, last year 90%, two years ago 80%, and so on.

That is intuitive, but it has a problem.

In startups, value can be created very late.

If early contributions decay too much, the people who carried the early years may lose most of their advantage precisely when the value finally appears.

This also creates a strange incentive: if your early contribution keeps decaying, you might be better off leaving and starting again in another company using the same model.

That seems wrong.

The craft coefficient solves a different problem. It does not say that old time becomes less valuable. It says that time invested when the company was smaller and riskier has a different weight.

The memory is not based on age.

It is based on scarcity.

What happens when someone leaves?#

If someone leaves the company, their accumulated time capital should not disappear.

They did spend that time. The contribution happened.

But they should stop accumulating new time capital.

So their economic share gradually decreases in relative terms, not because it is erased, but because active contributors keep adding new points.

This seems fair.

A former contributor keeps economic recognition for past time invested. But they no longer participate in the internal democracy of the workplace, because they are no longer part of the living work organization.

That distinction matters.

Economic rights, not full political control#

A model like this can easily scare investors if it sounds like every employee gets to vote on every decision.

That is not the idea.

Time capital should mainly create economic rights.

It may also create limited internal democracy around work organization:

• working rhythms;
• weekly structure;
• internal rules;
• contribution conditions;
• collective work practices;
• health of the work environment.

But it should not automatically give global political rights over everything.

Founders and executives still need to run the company. Roles and responsibilities still matter. If someone is hired as Head of Marketing, the whole company should not vote on the marketing strategy. If someone leads engineering, their role should be respected.

The same applies to investors.

For the model to be investable, investors need clear interlocutors. They need founders or executives who can negotiate, decide, and take responsibility.

So the governance should remain close to a normal startup on constitutional and capital matters:

• fundraising;
• sale of the company;
• investor relations;
• capital structure;
• strategic direction;
• appointment of executives.

Time capital should not turn the company into a permanent assembly.

It should make the distribution of value fairer, and the internal work organization healthier.

Founder risk should be treated separately#

There is another important distinction.

Founders often contribute in several different ways at the beginning:

1. They create the company and hold the initial shares.
2. They may advance personal money to pay early costs.
3. They may work without salary or with reduced salary.

These should not be mixed.

If a founder advances money outside the initial share capital, that can be treated as a founder financial claim.

There are at least two possible treatments:

• it can be reimbursed later with a predefined risk premium;
• or it can be converted into a financial-capital position.

If a founder works without salary, the time still counts as time capital. But the unpaid salary can also create a separate deferred compensation claim.

The important principle is transparency.

These rules should be defined before the first employee joins. Otherwise, future contributors cannot understand what they are really entering into.

Why this could help startups compete for talent#

A model like this could become a serious hiring advantage.

Not because everyone will understand the formula immediately.

But because the promise is different.

Most startups say:

Join us early, and you will have upside.

A dual-capital startup could say:

If you spend years building this company, the model will recognize that time directly. Not as a vague cultural promise, but as part of the economic architecture.

That is powerful.

It is especially powerful for experienced people who have already seen how startup value is usually distributed.

The point is not to replace market salaries. In fact, the model only works if salaries remain good.

The proposition is:

• market salary;
• investor-compatible structure;
• clear governance;
• and a more transparent sharing of the value created over time.

That is a much stronger offer than culture rhetoric alone.

Why this could interest investors#

At first, investors may see this as complexity.

But there is another way to see it.

A startup that shares value more credibly with early employees may be better at attracting and retaining talent.

It may reduce resentment around equity.

It may create stronger long-term alignment.

It may help founders recruit people who would otherwise hesitate to join an early-stage company.

It may also become a reputational advantage for funds that want to back companies with better labor economics, without abandoning the venture model entirely.

The key is compatibility.

If financial capital remains legible, and if governance remains practical, then time capital does not have to be anti-investor.

It can be a talent-alignment mechanism.

Why this could interest lawyers#

This is also a legal design problem.

Different jurisdictions may already have tools that can support parts of this model:

• special share classes;
• profit-sharing rights;
• phantom equity;
• trusts;
• contractual pools;
• partnership-like mechanisms;
• customized corporate bylaws;
• hybrid governance structures.

In France, one might explore customized SAS structures. In the US, UK, Germany, or elsewhere, the implementation would likely be different.

That is exactly why I am writing this publicly.

The concept is not tied to one jurisdiction.

The question is broader:

What legal structures could make time capital real, while keeping companies understandable and financeable?

What I am looking for#

I am not claiming this is finished.

I am looking for people who can challenge it.

Especially:

• startup lawyers;
• venture capital investors;
• founders;
• operators;
• compensation experts;
• people who have designed alternative ownership structures.

The questions I would like to explore are:

• What existing structures already solve part of this?
• Which jurisdictions are best suited for it?
• How can time capital create economic rights without making governance chaotic?
• How should founder unpaid work and founder cash advances be treated?
• How can investors remain protected without absorbing all upside?
• What would make this model simple enough to be understood by employees?
• What would make it acceptable to serious investors?

If you want to stress-test the model, I also made a simulator here:

Open the simulator

Closing thought#

This is not a proposal to abolish startup capitalism.

It is a proposal to make it more accurate.

Startups are not built by money alone.

They are built by people spending finite years of their lives on uncertain projects.

If we know how to reward capital for taking risk, we should also learn how to reward time for doing the same.

Money finances the company. Time builds it.

A better startup ownership model should recognize both.