Technical Co-Founder Equity: What to Offer in 2025 (Real Splits + Calculator)

"How much equity should I give my technical co-founder?"

It's the question that keeps non-technical founders up at night. Give too little, and you can't attract top talent. Give too much, and you'll regret it at your Series A when that 50% stake is worth $5M.

After 20+ years advising founders on equity decisions, I've seen every mistake: 50/50 splits that destroy companies, 10% offers that insult experienced CTOs, and vesting schedules that leave founders unprotected when co-founders quit after 6 months.

This guide breaks down exactly what equity to offer a technical co-founder in 2025, how vesting works, what affects the percentage, and the expensive mistakes to avoid.

Quick Answer: Standard Technical Co-Founder Equity Splits

Here's what you should offer based on timing and contribution:

Pre-Product (Idea Stage)

• Equal partners: 50/50 split
• You have domain expertise: 60/40 (you get 60%)
• They're first employee: 40-50% for co-founder

Post-MVP (Product Built)

• MVP already validated: 20-30%
• Some revenue ($1-10K MRR): 15-25%
• Established product ($10K+ MRR): 10-20%

Pre-Funding vs Post-Funding

• Before raising: 30-50%
• After seed round: 10-25%
• After Series A: Hire as CTO (equity + salary)

With these critical requirements:

• ✅ 4-year vesting minimum
• ✅ 1-year cliff (they get nothing if they quit before year 1)
• ✅ Full-time commitment required
• ✅ Documented in legal co-founder agreement

What Actually Affects Equity Percentage

Not all technical co-founders deserve the same equity. Here's what should influence the split:

1. When They Join

This is the single biggest factor.

Joining at idea stage (you have nothing):

• Risk: Maximum (idea might fail)
• Value: Building from zero
• Typical equity: 40-50%

Joining with validated MVP (you built no-code version):

• Risk: Medium (product-market fit unproven)
• Value: Rebuilding properly
• Typical equity: 25-35%

Joining with revenue ($1-10K MRR):

• Risk: Lower (customers paying)
• Value: Scaling existing product
• Typical equity: 15-25%

Joining post-funding (raised seed/Series A):

• Risk: Lowest (funded runway)
• Value: Growing team
• Typical equity: 5-15% (or hire as CTO with salary)

Real Example:

• Founder A gave 50% to technical co-founder at idea stage → $2.5M at $5M valuation
• Founder B gave 25% to technical partner with $5K MRR → $1.25M at $5M valuation

Same valuation, $1.25M difference because of timing.

2. What They're Actually Bringing

Just coding skills:

• Can find anywhere
• 10-20% max

Technical leadership + architecture:

• Designs scalable systems
• 20-30%

Technical co-founder (full partner):

• Product decisions
• Technical hiring
• Long-term strategy
• 30-50%

They're bringing their own funding:

• Investing $50K+ of their own money
• Negotiate separately
• +5-10% for significant investment

3. Full-Time vs Part-Time

This is non-negotiable for co-founder-level equity.

Full-time commitment (40+ hours/week):

• Co-founder equity (30-50%)
• Standard vesting applies

Part-time ("nights and weekends"):

• NOT a co-founder
• Consultant/contractor equity (0.5-2%)
• Or hourly payment

The math: If someone works 20 hours/week instead of 40, they're providing half the value. Equity should reflect this (or pay them hourly instead).

4. Your Own Contribution

Don't give away equal equity if your contributions aren't equal.

You bring:

• Domain expertise
• Initial capital ($10K-50K invested)
• Established customer relationships
• Brand/audience

You get: 55-70% equity

They bring:

• Technical skills only
• No capital
• No customer relationships

They get: 30-45% equity

Fair ≠ Equal. Fair means proportional to risk and contribution.

The Real Cost of Equity: Valuation Scenarios

Let's talk actual dollars. Here's what that equity costs you at different valuations:

20% Equity Split

Valuation	20% Worth	Your 80% Worth
$1M (Seed)	$200,000	$800,000
$5M (Series A)	$1,000,000	$4,000,000
$10M (Series A+)	$2,000,000	$8,000,000
$50M (Series B)	$10,000,000	$40,000,000
$100M (Later stage)	$20,000,000	$80,000,000

For comparison: Hiring a senior developer to build your MVP costs $30K-60K.

That 20% could cost you $2M at Series A. Could you have achieved the same outcome by hiring?

50% Equity Split (Common for Pre-Product Co-Founders)

Valuation	50% Worth Each	Alternative Cost
$1M (Seed)	$500,000 each	Could've hired 3 devs for 2 years
$5M (Series A)	$2,500,000 each	Could've hired 10 devs for 2 years
$10M (Series A+)	$5,000,000 each	Could've built entire team
$50M (Series B)	$25,000,000 each	Ouch.

This is why timing matters so much. The same 50% split made at $10K MRR instead of $0 MRR would leave you with millions more.

Calculate Your Scenario

Scenario Calculator:

• Your equity: ___%
• Co-founder equity: ___%
• Expected Series A valuation: $___M
• Your share worth: $___M
• Co-founder share worth: $___M

Alternative cost to build MVP: $30K-60K (vs equity worth $__M at exit)

Vesting Schedules: Non-Negotiable Protection

Vesting protects you if your co-founder quits, gets fired, or stops contributing. Never give equity without vesting.

Standard Vesting Structure (4-Year with 1-Year Cliff)

Year 1: 0% vested (The Cliff)

• If they quit in month 11: They get nothing
• If they make it to month 12: They get 25% of their equity
• This protects you from "tourists"

Years 2-4: Monthly vesting

• Vests 1/48th of total equity per month
• Month 13-48: Additional 2.08% per month
• After 4 years: 100% vested

Example with 40% equity offer:

• Month 0-11: 0% vested (they get nothing if they leave)
• Month 12: 10% vested (25% of their 40%)
• Month 24: 20% vested (50% of their 40%)
• Month 36: 30% vested (75% of their 40%)
• Month 48: 40% vested (100% of their 40%)

Why the 1-Year Cliff Matters

Without cliff:

• Co-founder joins, works 3 months, quits
• Takes 6.25% of your company forever
• You have to find/onboard replacement
• Dilutes future equity pool

With 1-year cliff:

• Co-founder quits at 3 months: Gets 0%
• Co-founder quits at 11 months: Gets 0%
• Co-founder quits at 13 months: Gets 25% of their allocation

The cliff ensures they're committed for at least a year before earning any equity.

Acceleration Clauses (Be Careful)

Single-Trigger Acceleration:

• Equity fully vests if company is acquired
• Risk: Co-founder gets 100% equity on day 1 of acquisition

Double-Trigger Acceleration:

• Equity vests only if (1) acquired AND (2) they're fired
• Better: Protects co-founder but doesn't incentivize early exit

Recommendation: Double-trigger only, or no acceleration at all for first 2 years.

Common Equity Mistakes That Cost Millions

Mistake #1: The 50/50 "Fairness" Trap

The Setup:

• "We're both founders, so 50/50 is fair"
• Sounds egalitarian
• Feels like partnership

The Reality:

• Deadlock on major decisions
• No tiebreaker for disagreements
• One person usually contributes more (creates resentment)

What happens:

• 18 months in, you're doing sales/fundraising full-time
• They're coding 20 hours/week (got comfortable)
• You're both still at 50/50
• You resent them, they feel attacked
• Company dies from co-founder conflict

Better approach:

• 60/40 or 55/45 split
• Gives one person decision authority
• Both still meaningfully invested
• Can revisit after milestones

Real story: I advised a founder who did 50/50 at idea stage. Co-founder quit after 14 months (after cliff). Walked away with 25% of a company now worth $8M. That's $2M for 14 months of work.

Mistake #2: No Vesting Schedule

The Setup:

• Co-founder gets 40% equity, fully vested day 1
• "We trust each other"
• No legal agreement

The Reality:

• Month 6: They get a full-time job offer
• "I'll work on this part-time"
• Contributes 5 hours/week
• Still owns 40% of your company

What happens:

• Can't remove them (equity already vested)
• Can't dilute them without their permission
• They sit on your cap table forever
• Future investors hate this

Better approach:

• 4-year vest, 1-year cliff (minimum)
• Documented in founder agreement
• Board can accelerate if they over-perform

Mistake #3: Equal Equity for Unequal Risk

The Setup:

• You quit your job, invest $30K, work full-time
• They keep their job, invest $0, work nights/weekends
• You offer 50/50 "because we're both founders"

The Reality:

• You're taking 100% financial risk
• They're taking 0% financial risk
• You're working 40 hours/week
• They're working 10 hours/week
• Equal equity for 4x less work?

What happens:

• You burn out from resentment
• They don't feel urgency (still have salary)
• Product doesn't ship
• You quit and shut down company

Better approach:

• Full-time + capital investment = 65-70%
• Part-time + no investment = 30-35%
• Can re-negotiate when they go full-time
• Or pay them consulting rates until full-time

Mistake #4: Giving Equity Too Early

The Setup:

• You meet someone at a networking event
• "Let's be co-founders!"
• Sign agreement, give 40% equity
• Haven't even validated the idea yet

The Reality:

• Week 3: You realize you don't work well together
• Week 8: They disappear
• Week 11: They resurface, want their equity
• Week 12: You're stuck with them or giving them 10% to leave

What happens:

• You're locked into a bad partnership
• Or you buy them out (expensive)
• Or you can't raise funding (investors won't touch messy cap tables)

Better approach:

• Work together for 3 months as contractors first
• Split revenue/expenses during trial period
• Sign co-founder agreement only after you're certain
• Start vesting from day 1 of partnership, not day 1 of meeting

Mistake #5: Ignoring Roles & Responsibilities

The Setup:

• "You build, I'll sell"
• No documentation of who does what
• Vague responsibilities

The Reality:

• Month 6: "Why aren't you doing sales?"
• "I thought you were doing sales"
• Confusion, finger-pointing, resentment

What happens:

• Duplicate work or no work
• Disagreements on performance
• One person feels they're carrying the company
• Toxic environment

Better approach:

• Document roles in co-founder agreement
• Define success metrics for each role
• Quarterly reviews of contribution
• Can trigger vesting adjustments if imbalance

The Co-Founder Equity Agreement (Legal Protection)

Never do a handshake deal. Never. Not even with your best friend.

What Must Be in the Agreement

1. Equity Allocation

• Exact percentages
• Type of equity (common stock, options, etc.)

2. Vesting Schedule

• 4-year vest minimum
• 1-year cliff minimum
• Monthly vesting after cliff
• Start date clearly defined

3. Roles & Responsibilities

• Who does what
• Decision-making authority
• Time commitment expectations
• Performance expectations

4. Decision Rights

• What requires unanimous consent
• What requires majority
• Who has tiebreaker authority

5. Intellectual Property

• All IP belongs to company
• No side projects using company resources
• IP assignment upon leaving

6. Termination & Buyback

• What happens if they quit
• What happens if they're fired "for cause"
• Buyback price for unvested equity
• Buyback price for vested equity

7. Non-Compete & Non-Solicit

• Can't start competing company
• Can't poach employees/customers
• Duration (1-2 years)

8. Capital Contributions

• Who invests how much
• How cash investment affects equity

Cost to get this done right: $2,000-5,000 with startup lawyer

Cost if you don't: $50,000-200,000+ in legal fees to untangle

How to Have the Equity Conversation

Before the Conversation

1. Do your homework:

• Research market rates for equity
• Understand your company's stage
• Know what you need from them
• Prepare multiple scenarios

2. Know your limits:

• Maximum equity you'll give: ___%
• Minimum vesting: 4 years
• Required commitment: Full-time
• Non-negotiables: List them

3. Understand their position:

• Are they leaving a job? (Need more equity)
• Do they have savings? (Less urgency)
• Are they experienced? (Know market rates)
• Other offers? (Competitive pressure)

During the Conversation

Start with alignment:

• "I want us both to feel this is fair"
• "Let's talk about what fair looks like"
• "My goal is a long-term partnership"

Present the math:

• "Here's what I'm thinking: __% equity"
• "Here's why: [timing/contribution/risk]"
• "At a $5M valuation, that's worth $___"
• "Does that feel fair to you?"

Discuss vesting openly:

• "Standard is 4-year vest with 1-year cliff"
• "This protects both of us if things don't work out"
• "I'm on the same vesting schedule"

Address concerns directly:

• If they push back on percentage: "What would feel fair to you and why?"
• If they resist vesting: "Why do you feel vesting isn't appropriate?"
• If they want immediate equity: 🚩 Red flag

Document next steps:

• "Let's both think about this for 48 hours"
• "I'll send you a draft term sheet by Friday"
• "We'll review with a lawyer before signing"

Red Flags During Negotiation

🚩 They want market-rate salary + high equity

• Can't have both at early stage
• Below-market salary = offset by equity
• Market salary = lower equity

🚩 They won't accept vesting

• "I don't believe in vesting"
• Means they plan to quit early
• Walk away

🚩 They anchor to unreasonable comparisons

• "My friend got 50% as co-founder"
• (Friend joined pre-product, you have revenue)
• Different stage = different equity

🚩 They won't discuss it openly

• Gets defensive
• "Just trust me"
• Red flag for future disagreements

Alternative: When to Hire Instead of Co-Founder

Sometimes hiring is smarter than giving equity.

Hire instead if:

✅ You have $30K-60K saved

• Can pay for MVP development
• Retains 100% ownership
• No long-term commitment

✅ You're not sure about product-market fit

• High risk the idea won't work
• Don't want partner locked in
• Easier to pivot alone

✅ You don't want a business partner

• Value control over collaboration
• Willing to pay cash
• Don't need strategic partnership

✅ You have some revenue already

• $5K+ MRR
• Can afford to hire
• De-risk the equity decision

Hiring costs:

• MVP development: $20K-40K
• Technical partner (3 months): $15K-30K
• Part-time developer: $5K-8K/month

See: Technical Co-Founder vs Hiring: What Solo Founders Need → for complete comparison.

Or if you need technical execution without giving equity: Technical Partner for SaaS Startups →

Decision Framework: What to Offer

Use this framework to determine the right equity split:

Step 1: Assess Your Stage

• Idea only → Start at 40-50%
• MVP built → Start at 25-35%
• Revenue ($1-10K MRR) → Start at 15-25%
• Revenue ($10K+ MRR) → Hire vs co-founder question

Step 2: Assess Their Contribution

• Just coding skills → -10%
• Technical leadership + architecture → Baseline
• Product sense + strategy → +5%
• Investing their own capital ($10K+) → +5-10%

Step 3: Assess Risk & Commitment

• Full-time from day 1 → Baseline
• Part-time until validation → -15% (or hire instead)
• Quitting high-paying job → +5%
• Already has exit/wealth → -5%

Step 4: Calculate

Your final offer = Base (from Step 1) + Adjustments (Steps 2-3)

Example:

• Stage: MVP built → 30% base
• Contribution: Technical leadership only → 0%
• Risk: Full-time, quitting $150K job → +5%
• Final offer: 35% with 4-year vest, 1-year cliff

Step 5: Add Required Terms

• ✅ 4-year vesting minimum
• ✅ 1-year cliff
• ✅ Full-time commitment clause
• ✅ IP assignment
• ✅ Documented in legal agreement

FAQ: Technical Co-Founder Equity

Should technical co-founders get more equity than business co-founders?

No. Equity should reflect contribution and risk, not title. If both join at idea stage, work full-time, and bring equal value, equity should be equal (or near-equal like 55/45).

However: If the technical co-founder joins later (you already have traction), or you bring capital/domain expertise they don't have, the split should reflect that.

Example: If you invest $50K, bring 10 paying customers, and they join to build the product, 60/40 (you get 60%) is fair.

What if my co-founder quits before the 1-year cliff?

They get 0% equity. Their unvested shares return to the company. You own 100% again.

This is exactly why the 1-year cliff exists. It protects you from people who commit then quit early.

Important: Make sure this is documented in your co-founder agreement. Without it, they might argue they're entitled to equity anyway.

Can I change equity splits after we start?

Yes, but it's complicated:

Before incorporation: Easy. Just update your term sheet.

After incorporation: Requires:

• Both parties agreeing
• Board approval (if you have a board)
• Updated shareholder agreement
• Sometimes tax implications

Better approach: Get it right the first time. But if contribution imbalance becomes clear after 6 months, address it then (before resentment builds).

Should I do 50/50 if we're equal partners?

Short answer: No.

Better: 51/49, 55/45, or 60/40. Here's why:

1. Tiebreaker: Someone needs final say on major decisions
2. Contribution drift: One person always ends up contributing more
3. Future fundraising: Investors prefer clear decision-maker
4. Exit scenarios: Odd splits force decisive action

Exception: If you're absolutely certain you work perfectly together and have complementary skills, 50/50 can work. But I've seen it fail far more often than succeed.

What's the difference between equity and options?

Equity (Common Stock):

• You own shares immediately (subject to vesting)
• Vote on company decisions
• Get dividends (if any)
• Qualify for founder tax benefits (83(b) election)

Options:

• Right to buy shares in the future
• No voting rights until exercised
• No dividends until exercised
• Common for employees, rare for founders

For co-founders: Always give equity, not options. Co-founders are owners, not employees.

How do I handle a co-founder who's underperforming?

This is why vesting and roles matter.

If they're underperforming in year 1:

• Have direct conversation about expectations
• Set clear 30/60/90 day goals
• If no improvement: Part ways before 1-year cliff
• They get 0% equity

If they're underperforming after year 1:

• Review their vested vs unvested equity
• Can terminate "for cause" (stops future vesting)
• They keep vested equity, company gets unvested back
• Document performance issues (you'll need this legally)

Key: Your co-founder agreement should define "for cause" termination clearly.

What if I can't afford a lawyer for the agreement?

Don't skip the lawyer. But here's how to reduce cost:

1. Use YC's SAFE agreements as starting point
2. Use Clerky or Carta for incorporation + basic agreements ($1,000-2,000)
3. Then have a startup lawyer review (2-4 hours at $300-500/hr = $600-2,000)

Total cost: $1,600-4,000 (vs $50K+ to fix later)

Free option: FAST agreement template from Y Combinator, but still have a lawyer review before signing.

Next Steps

You now know what equity to offer, how vesting works, and how to protect yourself legally.

Your action plan:

1. Determine your offer using the decision framework above
2. Draft a term sheet (1-page document outlining terms)
3. Have the equity conversation with your potential co-founder
4. Hire a startup lawyer to create the co-founder agreement ($2K-5K)
5. Sign agreement before they write a single line of code
6. File 83(b) election within 30 days of signing (critical for taxes)

Still deciding between co-founder vs hiring?

Read the complete guide: Technical Co-Founder vs Hiring: What Solo Founders Need →

Need help executing without giving equity?

See how technical partnership works: Technical Partner for SaaS Startups →

Ready to discuss your equity situation?

Book a free 30-minute call: https://cal.com/matthewturley/30-min-meeting-with-continuum

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Key Takeaways:

• Standard equity: 20-50% depending on stage
• Always use 4-year vesting with 1-year cliff
• Earlier stage = higher equity
• 50/50 splits rarely work
• Get a proper co-founder agreement ($2-5K)
• Can't afford legal fees? You can't afford a co-founder.