How much equity to give a developer co-founder or first hire
How much equity to give a developer co-founder or first hire
Give a true technical co-founder 20% to 50%, most often 40% to 50% if they join at idea stage and work full-time on ramen pay. Give a first technical hire 1% to 5% pre-seed, 0.5% to 2% at seed, 0.25% to 1% at Series A, and 0.1% to 0.5% from Series B onward. Standard structure is a 4-year vest with a 1-year cliff. Anything stingier and they walk; anything more generous and you starve the option pool you'll need for hires two through ten.
This post is operational, not legal. The numbers below are 2026 benchmarks from Carta, Pulley, and Shareworks data. Before you sign anything, hire a startup lawyer; the cost of the wrong cap table at Series A is measured in millions of dollars and one or two awkward emails.
Co-founder vs first hire: the question that decides everything
Most founders mess up equity not because they pick the wrong number but because they mislabel the role.
A co-founder splits the company with you. They take existential risk: no salary, no safety net, their reputation tied to the same outcome as yours. A first technical hire is buying labor with stock; you've paid them money (probably below market), and the equity is a retention bonus and an upside lottery ticket. The first deserves 20% to 50%. The second deserves 0.5% to 5%. Confusing them costs you the cap table.
The clean test: if this person disappeared next Tuesday, would the company die or just slow down? If it would die, they're a co-founder. If it would slow down, they're a hire.
Carta's 2026 founder ownership data shows 56% of two-founder teams use unequal splits, with a median of 55/45. The other 44% go 50/50. Both can work. What does not work is treating a hire like a co-founder out of guilt, gratitude, or because they keep saying "we" in the Slack.
What to give a developer co-founder in 2026
The 20% to 50% range collapses to a tighter band once you ask three questions.
Did they join at idea stage and work full-time without salary? If yes, the floor is 40%. The ceiling is 50%. The 2024 Carta cohort showed equal splits hit 45.9%, up from 31.5% in 2015, and the 2026 trend continues. The reason is straightforward: in the AI-native era, a CTO who can ship infrastructure and fine-tune models is a true peer to the CEO, not a hired hand. If they brought the technical conviction, ship code daily, and quit a job to do this, 50/50 is defensible.
Did they join after you had revenue, raised money, or built the prototype yourself? Drop them to 10% to 25%. They're closer to a "founding engineer" than a co-founder. Below 10% is no longer a co-founder grant; it's a senior hire grant with a fancy title.
Are they part-time, advising, or moonlighting? They are an advisor, not a co-founder. Advisor grants are 0.25% to 1%, vesting over 2 years. Do not give a part-time CTO 30% of your company; you'll regret it the day you raise a seed round and the lead investor asks why this person owns more than the CEO.
The Carta median for an unequal two-founder split is 55/45. Translate that to a CEO + technical co-founder pair: 55% CEO, 45% CTO is reasonable when both joined together. If the CEO had the idea, raised the friends-and-family check, and brought the customer pipeline, 60/40 or 65/35 is defensible. Going below 30% for the technical co-founder will make the relationship feel asymmetric the first time the engineer pulls a 70-hour week.
A note on the 2026 talent shift. AI-native engineers using Cursor, Claude Code, and Copilot can ship MVPs in two to four weeks that used to take three months. That cuts both ways. It increases what one technical person can produce solo, and it also weakens the "I need a co-founder to write the app" argument, because for a lot of MVPs you can just book the work weekly instead.
What to give a first technical hire by stage
This is the most-Googled equity question, and the answer compresses to one table.
| Stage | First-hire equity range | Carta median | Vesting | Cash component |
|---|---|---|---|---|
| Pre-seed | 1% to 5% | ~1.5% | 4yr / 1yr cliff | Below-market |
| Seed | 0.5% to 2% | ~0.85% | 4yr / 1yr cliff | 75-90% market |
| Series A | 0.25% to 1% | ~0.5% | 4yr / 1yr cliff | Market |
| Series B+ | 0.1% to 0.5% | ~0.25% | 4yr / 1yr cliff | Market |
Carta's 2026 dataset shows the median first-employee grant is around 1%, with the 25th percentile at 0.50% and the 75th percentile at 4.00%. The drop after hire one is brutal. SaaStr's analysis of 50,000 startups found the sequence runs 1.5% for hire one, 0.85% for hire two, and 0.33% by hire five. That 43% cliff between hires one and two is by design: hire one takes real risk on a five-person company; hire two joins a smaller risk profile.
In practice: do not bracket your first ten engineering grants the same way. Hire one is a co-founder lite. Grants two through five taper. Grants six onward are option-pool territory. If you're building the right MVP scope, the first hire's grant should match the scope of risk they're absorbing. A first hire shipping a v1 against an unvalidated thesis deserves 2% to 5%; one joining after a seed round closed gets 0.5% to 1.5%.
Vesting, cliffs, and double-trigger acceleration
The structure is more standardized than the percentages.
4-year vest with a 1-year cliff. Nothing vests for the first 12 months. If the hire leaves or is fired before month 12, they walk away with zero. At month 12, 25% vests in a single chunk. The remaining 75% vests monthly over the next 36 months. This is the de facto standard for both founders and first hires; deviating from it raises a flag at the seed round.
Founders should also vest. Every institutional investor will require it at the seed round anyway, and the math is cleaner if you do it from day one. Reverse vesting on founder shares means if you walk in year one, the company can repurchase your unvested portion at the strike price. Without it, a co-founder leaves in month four with their full 40% and the cap table is broken.
Single-trigger vs double-trigger acceleration. Single-trigger means vesting accelerates the moment the company is acquired. Double-trigger means it accelerates only if (a) the company is acquired and (b) the person is terminated without cause within a defined window, often 12 to 18 months post-close. Most early hires get double-trigger or none. Single-trigger is reserved for founders and a handful of executives. The reason: acquirers will not buy a company where every employee's equity vests automatically on close; it removes their retention hook on day one.
For a first technical hire, the typical package is: 4-year vest, 1-year cliff, double-trigger acceleration on the unvested portion (sometimes capped at 12 months of acceleration, not the full unvested grant).
Option pool sizing and dilution math
The option pool is the bucket of unissued shares reserved for future grants. Investors will require you to size it correctly before they invest, and the math will surprise you.
Typical post-seed option pool: 13% to 20% of the fully-diluted cap table. The exact number is negotiated at the priced round; investors push higher (because the pool is created from your existing shares, not theirs), founders push lower.
Here is the dilution math that catches every first-time founder. You give hire one 2% at pre-seed. The company raises a $5M seed at $20M post-money; investors take 25% and require the pool topped to 15% pre-money. Your hire's 2% becomes about 1.4%. At Series A (another 20% plus a pool top-up), 1.4% becomes about 1%. By Series B, that original 2% grant might be 0.6%.
This is normal. It is also why the absolute percentage number matters less than the dollar value at the next round. A 2% grant at a $10M valuation is worth $200,000 on paper; a 0.5% grant at a $200M valuation (Series B) is worth $1M. The hire who joined at pre-seed got the better deal even though their percentage shrank.
ISOs vs NSOs and the 83(b) election
Three terms every founder should know before signing a grant.
ISO (Incentive Stock Option). Restricted to W-2 employees. Tax-advantaged: no tax on exercise (subject to the Alternative Minimum Tax), capital gains on sale if held long enough. The catch is the $100,000 annual exercise limit; if the fair market value of stock that becomes exercisable for the first time in a calendar year exceeds $100,000, the excess is automatically reclassified as NSO.
NSO (Non-Qualified Stock Option). Granted to anyone (employees, contractors, advisors, board members). On exercise, the spread between fair market value and strike price is taxed as ordinary income, immediately, even if you don't sell the stock. Worse for the recipient, but flexible for the company.
83(b) election. If the company allows early exercise of unvested options (or if you receive restricted stock as a founder), you can file an 83(b) election within 30 days to be taxed on the value at grant date instead of as the stock vests. For founders with stock worth pennies, this is essentially free. Skip the 30-day window and you can owe tens of thousands of dollars in ordinary income years later as the stock appreciates and vests.
The 30-day deadline is not negotiable. It runs from the grant date (typically when the board approves the grant), not when you sign the paperwork. Founders forget this all the time and pay for it for years. If you grant founder stock or allow early exercise, calendar the 30-day deadline the day the board approves.
For first technical hires, the practical default is: grant ISOs (vesting, no early exercise), let them exercise as they vest. Avoid the early-exercise + 83(b) complexity unless the hire specifically asks. For contractors, you have no choice; it's NSOs.
When NOT to give equity at all
This is the section the top-10 SERPs skip, and it's the most useful one.
Equity is most expensive at the moment you have the least information. You don't know yet whether the product will work, whether the engineer will work out, whether the scope you're hiring for is the right scope. You're handing over a percentage of a future company in exchange for work that, six months later, you might wish you had paid cash for.
Three situations where giving equity is worse than paying cash:
You don't have product-market fit yet. If you're still validating the idea, equity is a payment for theoretical upside on something you can't yet describe. Pay cash for the work, save the equity for hires you make after revenue is real. The same logic applies to validating a B2B SaaS idea pre-launch; the experiments come before the cap table.
The scope is short. If you need 4 weeks of a senior engineer to ship a v1 and validate, that is not an equity-shaped problem. Equity assumes a multi-year retention horizon. Cash for 4 weeks of work is honest and clean.
You're trying to compensate for a low salary. If your offer is "we'll pay you 60% of market plus 1.5% equity," and you have no traction, what you've actually done is asked the engineer to bet $40,000 a year of their cash compensation on your idea. Most experienced engineers will pass. Most who say yes regret it. A better deal: pay closer to market, give less equity, or skip the full-time hire and book the work weekly.
This is the moment Cadence shows up in the founder calculus. Cadence is an on-demand engineering marketplace where founders book vetted engineers by the week. Every engineer on the platform is AI-native by default, vetted on Cursor, Claude Code, and Copilot fluency before they unlock bookings. Pricing is fixed: junior $500/week, mid $1,000/week, senior $1,500/week, lead $2,000/week. There's a 48-hour free trial and weekly billing with no notice period. For founders pre-PMF, this is often the better trade: spend $4,000 to get a senior engineer to ship the v1 over 4 weeks, see if anyone wants the product, and only then have the equity conversation with someone who has earned it.
If you want to compare paths quickly, our Build/Buy/Book decision tool walks through the same logic in 90 seconds and outputs a recommendation. It's free.
The decision tree: what to do this week
Three questions, in order:
1. Co-founder or hire? If they're full-time without salary and the company would die without them, they're a co-founder; the conversation starts at 30% to 50%. Otherwise, they're a hire; the conversation starts at 0.25% to 5% depending on stage.
2. Do you have product-market fit? If no, do not give equity for short-scope work. Pay cash weekly. Save equity for hires you make after the thesis is validated.
3. Vesting and structure. 4-year vest, 1-year cliff, double-trigger acceleration on unvested. ISOs for employees, NSOs for contractors. 83(b) within 30 days for restricted stock or early-exercised options.
If you're still mid-loop and trying to find a co-founder at all, the technical co-founder hunt can take 6 to 12 months and most never close. If your runway is tighter than that, booking a senior engineer weekly until you have the traction to attract a real co-founder is often the cleaner path. And if a partnership has gone wrong, handling a co-founder breakup gracefully is its own playbook entirely.
If you're trying to back into the equity question by first benchmarking what a CTO salary at a startup actually looks like in 2026, that piece pairs cleanly with this one.
Try Cadence if you're not ready for the equity conversation. Book a vetted, AI-native engineer in 2 minutes for $500 to $2,000 per week, with a 48-hour free trial and no notice period. Spend cash on the work, save equity for the hire who has earned it.
FAQ
Is 50/50 with a technical co-founder a bad idea?
Not always. 45.9% of two-founder teams went 50/50 in 2024 according to Carta, and the trend has continued into 2026. It works when both founders joined at idea stage, both are full-time, and both share the existential risk equally. It fails when one person ends up doing 80% of the work and there's no mechanism to rebalance.
What is a 1-year cliff and why is it standard?
Nothing vests for the first 12 months. If the hire leaves or is fired before month 12, they get zero shares. At month 12, 25% vests instantly and the remaining 75% vests monthly over the next 36 months. The cliff exists to protect the company from a bad early hire walking away with 6 months of equity for 3 months of work.
Should a first technical hire get accelerated vesting on acquisition?
Most early hires get double-trigger acceleration: vesting accelerates only if the company is acquired AND they are terminated without cause within a defined window (typically 12 to 18 months). Single-trigger is rare outside founders.
Can I give equity to a contract developer?
Yes, but as NSOs (non-qualified stock options), not ISOs. ISOs are restricted to W-2 employees. NSOs work for contractors but the tax treatment is worse: ordinary income on exercise, taxed immediately. Most founders skip this and either convert the contractor full-time or pay cash.
What if I do not have product-market fit yet?
Consider not giving equity at all for short-scope work pre-PMF. Pay cash weekly for shippable features. Once revenue or a clear signal is real, the equity conversation becomes a real one with someone who has earned it.
How much should the option pool be at seed?
13% to 20% of the fully-diluted cap table, with 15% as the most common landing point. Lead investors require the pool sized before they invest, and it comes out of the founders' shares pre-money, not the investors'. Too small invites a Series A top-up that dilutes you again; too large hands unnecessary dilution to seed investors.
This post is not legal or tax advice. Hire a startup lawyer (Orrick, Cooley, Wilson Sonsini, Gunderson, Fenwick) before you sign any equity documents. The cost of getting this right at the start is a few thousand dollars; the cost of getting it wrong shows up at Series A and is much, much higher.