How to share technical co-founder equity

How to share technical co-founder equity

According to a Business Insider study, a reasonably large number of startups that worth US$1 billion had more than one co-founder. This study’s results are pretty self-explanatory because if you are working on a tech startup, there is a good chance that you will succeed if you work with someone. For example, 37 out of 39 successful startups had at least one founder with a technical background.

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However, in such startups, the question always arises, how much should a technical co-founder receive for his contribution to the startup’s development? In this article, we’ll answer that question and show you how to find a technical co-founder for your startup.

Who can be a Technical Co-Founder?

First, let’s figure out who can become your future technical co-founder. Three high-level roles can be technical co-founders, and we will briefly analyze each one.

Senior Programmer

Senior programmer is a specialist with over five years of technical experience and many completed projects. He must also have experience in solving the problem that you are about to face and must have in-depth knowledge of the industry.

CTO

CTO is a slightly different level than the senior programmer. CTO possesses both technical knowledge and business experience. If you are want to find a CTO for a startup, you are must look for a specialist with a deep understanding of the business aspects and who knows how to organize a workflow effectively.

Already a Tech Co-Founder

A co-founder is a major league since such a specialist has a right to vote and receive capital compensation. This is why tech co-founders can’t be considered as full-time employees. You find yourself a partner, not hiring a co-founder. A tech co-founder has the same knowledge and skills as a CTO, but a startup or company is invested many times more.

Must-have skills and traits for Technical Co-Founder

To find a reliable technical co-founder, you must know what traits and skills a future candidate should have.

  • Communication skills. You will continuously stay in touch with a technical co-founder, and as a result, communication should be simple and effective.
  • Long-term thinking. A startup is not a fast business, and it takes time to develop. An excellent technical co-founder thinks 5 to 10 years ahead yet realizing development opportunities now.
  • Team-player skills. A good technical co-founder is always with the team, and the team’s success always comes first.
  • Complementary traits. Afraid to make risky decisions? Find someone who is risk-tolerant. Find a technical co-founder to complement you.

How to convince a Tech Co-Founder

Now is the time to consider how to convince a technical co-founder to be a part of your project. There are two options for this: salary payment, offering technical co-founder equity, or both.

Salary

This option is the most obvious since it is a tiny chance that a technical co-founder will invest their strength and knowledge in your project on pure enthusiasm. So it’s not recommended to count on this chance.

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If the technical co-founder is qualified enough to make money from you, he is qualified to make it elsewhere. This is why giving up a paycheck is definitely not the best choice when looking for a technical co-founder.

And now to the numbers. According to Glassdoor, the median annual salary for a co-founder in the United States is US$102,055. This will give you a complete idea of ​​whether you have the resources to pay the technical co-founder.

Tech Co-Founder equity

Different teams have different approaches to an equity share. Some teams do it right away, while other teams need time to get to know each other, and after that, they begin to share equity.

We suggest using the Founders Pie Calculator for a more accurate assessment of the division of capital’s correctness. This method involves the evaluation of several aspects.

  • Idea
  • Business knowledge
  • Knowledge of the subject area
  • Liabilities and risk
  • Duties

Every aspect of a startup needs to be rated on a scale of 0 to 10 for each co-founder.

After that, it’s time to evaluate each co-founder. Who came up with the startup idea? Who has more experience in the field? Who is in charge of the technical side? The assessment is also carried out on a 10-point scale.

The final stage of the assessment will be the calculation of the exact equity of each co-founder. To pull this off, multiply each value of the founder by the value of the factor that we calculated first to calculate the points. Then add up the numbers for each founder, add those totals, and calculate the percentages.

Where to look for Technical Co-Founder

One of the best ways to find a technical co-founder is to research specialized platforms where co-founders offer their services to companies. We’ll take a quick look at a few of the most well-known platforms worth checking out.

CoFoundersLab

This platform has a pool of over 400,000 co-founders from over 140 countries. To found a co-founder, it is enough to indicate the skills, location, current stage of your startup, and the AI algorithm selects the best candidates based on your requirements. The platform offers a US$19.99 per month subscription that unlocks additional features such as advanced search filters, ‘who’s viewed my profile’ feature, and more.

Founders Nation

Founders Nation allows founders to study the profiles of co-founders for hiring them in their projects. However, the platform requires startup owners to provide detailed information about their project, including a full description of the idea, business plan, etc. In addition, if the founder has a successful project, the site can provide his profile with the “verified founder” badge.

AngelList

It is a huge platform for startups and angel investors. The platform is popular with Twitch, Stripe, and over 100,000 startups using AngelList Talent to recruit top job seekers.

Of the handy features, AngelList has a payroll and capital calculator for startups for a general idea of how much capital to give a tech co-founder.

Wrapping up

We have covered everything related to technical co-founder equity and finding a technical co-founder for your startup. Now you are armed with knowledge and ready to find a co-founder who will enrich your startup with knowledge and experience.

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Contributor

Vitaly Kuprenko

Vitaly Kuprenko is a writer for Cleveroad, a web and mobile app development company with headquarters in Ukraine. He enjoys writing about technology and digital marketing.

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