Loading...
Answers
MenuShould you split equity equally with a tech cofounder if you have an MVP, some traction but you know that you're going to need a CTO when it takes off
This question has no further details.
Answers
If you and this person, *know* they won't be the CTO, then absolutely not. If there's an understanding that the engineer you are working with is going to "cap out" soon beyond the MVP, why would you ruin your cap table?
This *should* help you get a reasonable amount of equity. http://foundrs.com/
The most crucial question is where this current contributor is likely going to be out of their element. Are they only front-end and have no back-end ability? If so, you really should raise (from a friend or family member) or borrow the money necessary to pay this person a reasonable cash rate.
If on the other hand, they can take a successful MVP and build a reasonable back-end but will cap out on scaling it past 100,000 users, or for example, you're an enterprise company and you know you'll require a technical person to be part of closing early sales, then it's ok to give up meaningful equity.
But another key question is: Are you ok to let this person define your company's engineering culture? If this person isn't capable of or comfortable managing your tech team in the early-days, this person should have no more than 10% equity.
Of course, your shares and theirs (whatever you decide) should be subject to a vesting agreement (minimum 3 years and preferably 4).
It's easy to give away equity when it's worth very little but as I've said here before on Clarity, imagine your company today being worth $100,000,000. Can you imagine this person contributing $20,000,000 worth of value to achieve that outcome? $30m? $50m?
Here's the thing though. If this person can grow into a CTO, and wants the chance, and there's no warning signs that it will be a tough slog for them to get there, and they're a passionate believer in what's been built to date, then it's entirely reasonable to bet (with equity) that they can get there. I know a lot of CTO's of great Series A and beyond companies with amazing traction that started off as lacking a lot of the criteria of a great CTO candidate.
This is an area I've helped coach a lot of startup CEOs through and have experience in myself. Happy to talk through in a call to understand the specifics of your scenario and provide more detailed advice.
the answer is not as simple as you might expect it. The amount of equity you share must have a lot of considerations on your end before offering any amount or percentage... it also depends on how you have your "company" structured... llc for example has no limited partnerships but ownership % can be manipulated a bit... feel free to give anyone of us experts in this topic ;)
If you know that the tech cofounder is about to leave, then probably they should have options.
A cap table (with founder shares) has usually Equity and Options. The main difference is that Equity is hard to give and hard to take away (think: Shareholder agreement etc...), Options (easy to give, easy to take away).
The above question would probably be never be asked due to a number of reasons.
Without funding, it will be very hard to attract a CTO after a tech co-founder leaves.
Fundable startups at very early stage are usually composed of 2-3 founders. This is to due with many factors.
If 2 people, then one should have a majority, one minority. Someone has to lead (decision). With 3 founders it is different. If you have more then 3 founders, the startup might go into too many directions. it does not mean it does not happen, but you might be creating a barrier (IF YOUR GOAL IS TO RAISE MONEY).
It is very important that your MVP is validated with customers and gets traction. Traction is Users or Revenue.
I suggest you learn how a cap table works and if you do some simulations you will see how to answer this question.
Related Questions
-
What is the best technology for creating web based project?
The best technology is whatever gets you up and running the quickest. You'll throw away the first iteration (and possibly the second and third...) anyway. What you need most in the beginning is to test your idea and get feedback, and you need it fast.DK
-
What's the best forum software to get off the ground quickly that would require minimal customization.
One of the best and most popular script used is Vbulletin. Most of the reputable forums are powered by Vbulletin. The second recommendation I'd have is phpBB. It is absolutely free and open sourced versus Vbulletin which is licence based. I have used both and had no problems with either of them. If you can fork out some money I'd suggest going with Vbulletin. Here is a list of the biggest internet forums http://en.wikipedia.org/wiki/List_of_Internet_forums. You can see most of them are powered by Vbulletin and the second most popular script is phpBB. Regarding fresh look you can simply hire someone or buy a Template.AC
-
What does it mean to 'grandfather you in' in the tech world?
It stands for allowing someone to continue doing or use something that is normally no longer permitted (due to changing regulations, internal rules etc.)OO
-
I am a non tech entrepreneur desperately trying to find answer to highly technical and nuanced questions on the cheap.
The best way would be to hire an expert on oDesk, etc. which is fairly cheap and also reliable. But It sounds like you want to go even cheaper than that. Try posting on StackExchange, which is free. Another cheap option is to check local Meetup.com tech gatherings in your area and ask some experts directly for free advice. Good luck!II
-
What is the best polling/survey software to use for a social network?
We have had good luck with both Survey Monkey and the survey tool built into Constant ContactLB
the startups.com platform
Copyright © 2025 Startups.com. All rights reserved.