Equity, capital, or time?

Spend only what you have to. And spend it wisely.

Rick Turoczy
Feb 4, 2016 · 4 min read
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(Image courtesy Julie Jablonski. Used under Creative Commons.)

If there’s one thing that’s common to all startups, it’s the fact that they’re strapped for resources. They need more of everything. More money. More people. More time. More more MOAR.

But whether they realize it or not, they do have some important resources at their disposal. Valuable resources. And those resources, used wisely, can be effectively leveraged to the advantage of the company and founders. But to do so, startups need a clear understanding of what’s cheap and what’s expensive as they’re growing their businesses.

At PIE, we tend to deal with early stage startups, so what we’ll describe comes from a view through that experience. Again, this perspective is early-stage-startup-centric. The perspective changes drastically as time goes on — and formerly cheap resources get more expensive — so we’ll stick with the messy early stage startup perspective. And specifically with this caveat: this is for those early stage startups who believe that they want to pursue outside investment to grow their business. It’s not for everyone. To each her/his own.

So with that in mind, here’s how we, at PIE, see the lay of the startup land from the cheapest available resource to the most expensive.


  • Use equity to buy capital;
  • Use capital to buy time;
  • Use time to create value.
  • Time is your most valuable asset.

At the early stages of a company, equity is the cheapest asset a startup has with which to bargain. It’s also the asset that promises to deliver the largest reward at the end of the whole gamble.

But when companies start, it’s cheap. So it’s the first thing startups should use as a point of leverage. Equity fuels the whole venture capital pursuit. Equity is how you woo new employees and potential cofounders. It’s an asset founders can use to gain access to accelerator resources, and to pay advisors for helping get a fledgling idea off the ground.

The important thing to keep in mind, however, is that while equity is often the cheapest asset at your disposal, don’t be cavalier with it. It may be cheap at the outset, but it is finite. Use your equity to create capital assets for your business that allow you to free up/shortcut time.

In terms of value and cost, capital is the middle ground of a startup’s resources. It’s not as affordable as equity but it’s cheaper than time. Time is priceless. Capital is a critical fulcrum to balance equity and time.

For many startups, selling equity in exchange for capital is seen as the only means of converting the lesser valued asset into the more valuable resource. But there are other ways to acquire operating capital beyond selling equity. Most notably, selling a product to a customer.

You know… business. The reason you started this whole thing in the first place.

Bringing in revenue can be beneficial to a startup for any number of reasons, but for the sake of this argument, revenue is a means to conserve or increase the amount of capital at a startup’s disposal. Create usable capital however you can, and put that capital to work as a means of conserving your most valuable asset, time. Even if that just means extending your runway for a few hours more.

“This thing all things devours: Birds, beasts, trees, flowers; gnaws iron, bites steel; grinds hard stones to meal; slays king, ruins town, and beats high mountain down. What am I?” — Gollum, The Hobbit

As if we haven’t hit it heavy enough, let us reiterate: Your most valuable asset as an early stage startup — more valuable than equity and more necessary than capital — is time. Yes, it seems obvious. But we’ve lost count of how many startups screw this value chain up.

Everything a startup does should be relentlessly focused on the most effective and efficient use of time — and any apparent avenue for cheating time through additional resources.

So if you have equity, use that to conserve time by offering it up to potential employees or advisors. If you have capital, use that to hire talent or acquire technology that moves your business forward.

Long story short, it’s all about time. Time is your most valuable asset. Don’t try to convince yourself otherwise. There is nothing more valuable to you, as an early stage startup, than time. Plan accordingly. And use every other asset at your disposal to buy more time.

Equity is cheaper than capital. Capital is cheaper than time. Everything you do should be focused on conserving or extending time. Use every other asset at your disposal to buy your business more time. In the most efficient and cost-effective way possible.

Time is expensive. And you’ve spent more than enough of your valuable time reading this. Get to it.

Thanks to Cami Kaos for reviewing this post in draft.

Rick Turoczy (@turoczy) has been working in high-tech startups in the Portland area for more than 20 years. As founder and editor of Silicon Florist, he has blogged about the Portland startup scene for nearly a decade — even though numerous people have begged him to stop. That side project led Rick to cofound PIE (the Portland Incubator Experiment), a startup accelerator formed in partnership with global advertising firm Wieden+Kennedy. Those efforts led to the founding of Oregon Story Board, a project that is using learnings from the PIE experiment to accelerate companies in the services industry.

All because of a blog. Weird.

Co-author Renny Gleeson (@rgleeson) cofounded PIE to drive innovation at the intersection of startups and brands at Wieden+Kennedy, the world’s largest independent creative agency.

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Rick Turoczy

Written by

More than mildly obsessed with connecting dots in the Portland, Oregon, startup community. https://www.youtube.com/watch?v=Cj98mr_wUA0

Portland Incubator Experiment

Thoughts on the world of startups from PIE

Rick Turoczy

Written by

More than mildly obsessed with connecting dots in the Portland, Oregon, startup community. https://www.youtube.com/watch?v=Cj98mr_wUA0

Portland Incubator Experiment

Thoughts on the world of startups from PIE

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