bbtomato

well there is usually some kind of promote structure for the side putting in the sweat equity. The money side will put up most or all of the capital, say 98% and the sweat equity side will put up 2%. Each will earn a preferred return of say 10% on their contributed capital. If there is cash available from the venture after paying off preferred returns, then the sweat equity side will split the cash at a promoted interest, say 20%. i.e. their % interest is 'promoted' from 2% to 20%.

....at least that how it works with real estate JVs where an investment manager will JV with a developer. Not sure if this is the typical structure in other industries. It depends on how much capital each side is contributing and who is managing the day-to-day work of the venture.

In any case, you need to know how the cash available from the venture is split between the JV partners.