sweat equity

noun

Definition of sweat equity 

: equity in a property resulting from labor invested in improvements that increase its value also : the labor so invested

Examples of sweat equity in a Sentence

He's built up a lot of sweat equity in his house. He put countless hours of sweat equity into that old house.

Recent Examples on the Web

All the partners put in the sweat equity that turned a former hardware store into a brewery. Kathy Flanigan, Milwaukee Journal Sentinel, "Vennture Brew Co. brings coffee and beer to Washington Heights neighborhood," 11 July 2018 My dad put in a tremendous amount of sweat equity into painting the multi-colored sticks in Hildi’s room. Alyssa Fiorentino, House Beautiful, "7 Surprising Things You Didn't Know About Trading Spaces," 1 June 2018 To qualify, applicants must be a first-time homebuyer, have a willingness to partner, volunteer 240 to 360 hours of sweat equity, and have financial and situational need. Linda Greenstein, BostonGlobe.com, "Habitat taking applications for four homes in Andover," 31 May 2018 At this point, Jordan Clarkson, Larry Nance Jr. Rodney Hood and Jose Calderon haven't earned that same sweat equity. Chris Fedor, cleveland.com, "Cleveland Cavaliers might have found trusted closing group, relying on familiar faces in crunch time," 25 Apr. 2018 The result of all of that sweat equity was a solid, 256 square-foot structure that is part of an 80-cabin network within the Alaska State Park system. Erin Kirkland, Anchorage Daily News, "Tonsina Point near Seward provides a perfect place for Alaska’s newest public-use cabin," 14 May 2018 Some drug users have racked up some sweat equity with do-it-yourself projects, sawing a cutout in a room's floorboard and covering with an area rug. Beth Warren, The Courier-Journal, "Not even the Bible is safe. Here's where experts say some kids hide their drugs," 9 Apr. 2018 The cost then was $98,000 including $15,000 of the owner's sweat equity ($186 cost per square foot). Janet Eastman, OregonLive.com, "A cottage industry: Reasons to build a small, second home on your lot (photos)," 24 Jan. 2018 The $90 kit from Paint Scratch was better for larger chips but required a tremendous amount of sweat equity, extra materials and the learning curve was steep. Paul Wright, Popular Mechanics, "How to Repair Car Paint Chips," 26 Feb. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'sweat equity.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of sweat equity

1950, in the meaning defined above

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The first known use of sweat equity was in 1950

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More Definitions for sweat equity

sweat equity

noun

Financial Definition of sweat equity

What It Is

Sweat equity is the time and effort that people contribute to a project.

How It Works

Sweat equity is used to describe the non-financial investment that people contribute to the development of a project such as a start-up business. For example, sweat equity is counted from the founders of the company, as well as advisors and board members.

In many situations where some members of a partnership are contributing their money and others are spending time, the partnership may be composed of cash and non-cash (or sweat equity). Ultimately, sweat equity is rewarded the same as cash equity through a distribution of stock or other forms of equity in a start-up venture.

Sweat equity can also be considered literal. For example, a homeowner may spend time fixing, repairing, and renovating their home.  The value of their efforts is considered sweat equity and adds to the value of the home.

Why It Matters

Sweat equity is important to the successful start-up of a new venture, especially when cash is in short supply. However, it is important to value sweat equity carefully.  In early stages, it is easy to overvalue it, offering stock in exchange for effort. However, over time, such trades can become very expensive and erode the equity available to follow-on investors. Sweat equity should be measured in terms of the long term value of the effort, the long term commitment of the participants, and the value-added by the participants to the overall goals of the venture.

Source: Investing Answers

sweat equity

noun

English Language Learners Definition of sweat equity

: value in a property, business, etc., that results from the work that a person does to improve it; also : the work itself

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