Technical Co-Founder Equity Split: A Practical Guide for Startup Founders
Technical Co-Founder Equity Split: A Practical Guide for Startup Founders
We've been doing this for over two decades. Since 2000, we've worked alongside founding teams as technical co-founders, advisors, and fractional CTOs. We've seen equity splits that worked brilliantly and ones that blew up spectacularly. The difference usually comes down to the same handful of decisions made early on.
The technical co-founder equity split: isn't something you can template. But there are patterns that actually work—and mistakes you can avoid if you know what to look for.
What Does a Technical Co-Founder Actually Bring?
Before you even think about percentages, be honest about what you're getting.
A technical co-founder in a hardware startup where they're also designing the manufacturing process? Different from a SaaS founder where the tech co-founder builds the MVP in six weeks. Someone bringing IP they've already built? Different again from someone starting from scratch.
At Cooply, we've structured arrangements as equity co-founders (typically 10-25%), fractional CTOs (1-5% equity plus monthly fees), and hybrid models (reduced rates at 50-70% of market plus 1-5% equity). Each works for different situations. The error most founders make is treating them all the same.
The technical co-founder is responsible for:
- Building the initial product (or assessing whether it's buildable)
- Setting technical direction and architecture
- Usually hiring and mentoring the first engineering team
- Making (or avoiding) technology decisions that could cost £50,000-£500,000+ if they go wrong
That's not a small thing. But it's also not infinite equity. The business model, the go-to-market, the fundraising, the customer relationships—those matter too.
Typical Equity Ranges by Scenario
Here's what we actually see work:
| Scenario | Equity Range | Notes |
|----------|--------------|-------|
| Equal co-founders: (same stage, both quitting jobs) | 20-25% each | Requires a cliff and vesting. Avoid 50/50 without terms. |
| Technical co-founder, non-technical founder: | 15-25% technical | Depends on how much the non-technical founder brings (capital, network, business expertise). |
| Late-stage technical hire (Series A+): | 2-5% | Lower because product exists, risk is lower, more support available. |
| Fractional CTO, part-time: | 1-3% + monthly retainer | Not a co-founder role. They're advisors with skin in the game. |
| Hybrid model: (reduced fees + equity) | 3-8% equity + 50-70% market rate | Good for founders who can't pay full market rate but want commitment. |
| Technical co-founder with IP: | 20-35% | If they're bringing genuine, transferable IP with market value. But get this audited. |
The pattern: higher equity = more dilution + more risk + more ownership of outcomes: . Lower equity = founder is hedging, or business is more mature.
The Factors That Actually Move the Needle
Stage of the company
Pre-revenue, pre-product? Higher equity makes sense. The technical co-founder is taking genuine risk—they might be working unpaid for 12+ months.
Post-MVP with traction? Lower equity. They're joining a business that's already proven concept-market fit. The risk is different.
Cash contribution
If the technical co-founder is also putting in £20,000-£50,000 of their own money, that changes the equation. We've seen it shift by 5-10 percentage points either direction.
Time commitment
Full-time? Equity percentage reflects that. But we work with fractional CTOs all the time. A 15-20 hour/week commitment for a technical co-founder? That's not a full co-founder split. That's equity with a day job. Price it accordingly.
Experience and credibility
A founder who's previously built and exited something? Their opinion on technical decisions carries more weight. You might pay for that credibility with higher equity, or with a higher retainer if they're fractional.
A first-time technical founder? Still valuable, but the risk is real. Smaller equity stake makes sense.
IP and existing tech
If they're bringing something that already exists—a codebase, a platform, a methodology—that's worth something specific. Get it valued properly. Don't guess. A proper IP audit costs £2,000-£5,000 and saves you arguments later.
If they're starting from scratch? They own nothing initially except their future work.
Vesting: Where Most Founders Get It Wrong
Here's the hard part that actually matters: vesting schedules: .
The standard in tech is 4-year vesting with a 1-year cliff: . That means:
- Day one: the co-founder has 0% of their promised equity
- Month 12 (the cliff): they vest 25%
- Months 13-48: they vest 1/36 per month
Why? Because if the co-founder quits or is let go after three months, should they keep 18% of the company? No. They shouldn't. Should they keep something if they leave after 14 months? Maybe. But not the full amount.
The cliff is critical. Without it, a co-founder can walk after 3-4 months with a vested chunk. With it, there's real commitment required.
We've seen handshake deals where two co-founders split 50/50, no vesting, and one quits after six months thinking they own 25% forever. Expensive mistake. This needs to be a document, witnessed, signed. Ideally by a lawyer. We're not lawyers. Get a lawyer.
Acceleration clauses
Should the vesting schedule accelerate if you get acquired, or if someone's fired without cause? That's worth discussing.
Common: double-trigger acceleration (acquisition + job loss = full vesting). Less common but sometimes fair: single trigger (acquisition alone = full vesting). We lean toward double-trigger. It encourages founders to care about outcomes, not just getting acquired.
The Hybrid Model: Our Experience
At Cooply, we sometimes take a model we call "reduced rate + equity." Here's why it works:
A startup with £150,000 seed funding can't afford to pay a technical CTO £120,000/year. But they need someone full-time. So we work at 50-70% of market rate (say, £60,000-£84,000) and take 3-8% equity with a standard vesting schedule.
The math: founder gets experienced technical leadership at a price they can afford. We get cash to run our business (consulting other clients, building IP) plus long-term upside if the company works out. And it's clear—this is a role, with cash, with equity, with vesting. Not a handshake.
This works best when:
- The founder has other funding for the team
- There's a clear product scope
- The relationship isn't dependent on us being broke and hoping the equity wins
Common Mistakes We See Founders Make
1. 50/50 splits without vesting.: Usually ends badly.
2. No cliff.: Someone leaves after four months with 3% equity. Forever. You can't change it without a major renegotiation.
3. Handshake deals.: "We'll do equity later, just agreed verbally." No. Write it down. Get a lawyer. Cost: £1,500-£3,000. Value: potentially millions if there's dispute.
4. Ignoring the tax position.: When someone gets equity, they might have a tax bill. This is complicated and depends on their circumstances. Not your job to figure out, but worth them knowing.
5. Overvaluing IP.: "I built a code library worth £200,000, so I deserve 30% equity." Maybe. Probably not. Get it valued by someone independent. Most internal tech is worth less than founders think.
6. Equity with no milestones.: Sometimes makes sense. But "you get 5% if we hit Series A" is a reasonable structure. Links their equity stake to outcomes.
When to Get Professional Help
You need a lawyer when:
- Equity is more than 5% and the vesting is more than 2 years
- There's IP involved from either party
- More than two co-founders
- You're funded (even pre-seed)
- You're not sure about tax implications
You might not need a lawyer for:
- Early-stage, two co-founders, no money, straightforward split with standard vesting
But honestly? For £1,500-£2,500, you'll sleep better. It's not expensive relative to the equity you're dividing.
Our Take After 25 Years
Technical co-founder equity should reflect:
- Risk: Are they risking their career? Their savings? That matters.
- Time: Is it full-time or 10 hours a week? Different thing entirely.
- Expertise: Experienced founders can command more. They should. They de-risk the business.
- Contribution beyond coding: Do they build hiring, scaling, and systems? That's worth equity.
- Market conditions: In 2024, good technical co-founders have options. You're competing for their time.
But it should NOT be:
- A guess
- A handshake
- Infinite (they shouldn't own the company)
- The same as what you read online (context matters)
We've seen 25+ of these arrangements work. The ones that lasted had clear terms, a vesting schedule everyone understood, and a lawyer's blessing. The ones that failed? Usually someone had a different idea of what they agreed to.
Get it in writing. Make the cliff real. Have an exit plan if it doesn't work out. Then move on and build the thing.
About Cooply
We're a technical founding team based in South Wales and Yorkshire. Since 2000, we've built and exited 25+ ventures, run platforms handling billions of messages and millions of concurrent users, and worked with hundreds of founding teams on questions just like this one.
We work as equity co-founders (10-25%), fractional CTOs, or the hybrid model. We're highly selective—we take 3-4 new ventures per year. We're not an agency. We're builders who've committed to helping other founders avoid the mistakes we've made.
Ready to talk about your technical co-founder structure?: Get in touch or read more about how to find a technical co-founder.