Brand equity is a bit of a fuzzy concept. Unlike shareholder equity, there aren't valuations set by funding rounds or other measures - in fact it's hard to put any numerical value on brand equity at all. That doesn't mean it's not important though, and building your brand equity is key to the success of a start-up.
Brand equity is a catch all term for the value of a company's brand and how it's perceived by consumers. This translates through into real effects on a business. If you've generated good brand awareness and your brand is trusted by consumers, then customers will be more likely to purchase from you.
So how do you build and protect brand equity? Unfortunately there's no easy shortcut. A combination of excellent products, customer service and marketing will slowly build brand equity over time. This will need to be combined with solid trade-marking and other defensive measures to protect all that hard work. And the bad news is that one bad story or customer review can wipe-out years of hard work.
A clear differentiation for your brand decreases consumer confusion and builds your brand identity, leading to strong brand equity and loyalty.