How much equity should a startup CTO get?
By SuLe · Updated 28 June 2026
It depends on whether they are a co-founder or a hire. A true co-founder CTO commonly holds 10–50% depending on stage and cash contribution; a salaried founding engineer who joins later typically gets 0.5–5% in options. The deciding factor is founder risk — whether they join early for little pay and are essential to building the company.
Key facts
- A co-founder CTO commonly holds 10–50%, depending on stage, cash contribution and how much risk they carry.
- A salaried founding engineer joining later typically receives 0.5–5% in options, not founder shares.
- The difference is founder risk: early joiners on little or no pay sit high in the range; salaried later hires sit low.
- CTO equity should vest, usually on the standard 4-year schedule with a 1-year cliff.
- Treat these ranges as market practice, not fixed rates — the right number turns on your specific facts.
How much equity should a CTO actually get?
There is no single figure, because "CTO" covers two very different roles. Market practice puts a genuine co-founder CTO somewhere between 10% and 50%, and a later salaried founding engineer between 0.5% and 5%.
The right point in that range depends on when they join, what they give up to do so, and how central they are to the product. Someone who leaves a senior job to build your technology unpaid is worth far more equity than someone who joins on full market salary a year in.
Treat every number here as market practice, not a rate card. The point of the ranges is to frame a negotiation, not to end one.
Why is the range so wide — co-founder CTO vs founding engineer?
Because the two roles carry completely different risk. A co-founder CTO takes founder risk: joining early, often working for little or nothing, betting years of their career on the company succeeding. That bet is what founder-level equity pays for.
A founding engineer — even a brilliant first hire with "founding" in the title — usually joins later, on a salary, once the idea is proven. They take employment risk, not founder risk, and options in the low single digits reflect that.
| Role | Founder risk? | Typical equity (market practice — verify against your facts) | Usual instrument |
|---|---|---|---|
| Co-founder CTO, joins at incorporation, little/no salary | Yes | ~25%–50% | Founder shares, reverse vesting |
| Co-founder CTO joining slightly later, some salary | Partly | ~10%–25% | Founder shares, reverse vesting |
| Founding engineer, salaried, joins post-incorporation | No | ~1%–5% | Options (often EMI) |
| Early engineer after the first hires | No | ~0.5%–2% | Options (often EMI) |
Should a CTO get shares or options?
It follows the same fork. A co-founder CTO taking founder risk usually receives founder shares under reverse vesting — owning all of them from day one, with unvested shares recoverable at nominal value if they leave.
A later, salaried founding engineer usually receives options instead, frequently through an EMI scheme, which suit someone joining once the company already has value. Giving a late hire cheap founder shares can create an immediate tax charge that options avoid.
The instrument should match the risk. Founder shares for founder risk; options for employment risk.
What vesting, paperwork and tax apply?
Vest it, whichever route you take. The standard founder pattern — four-year vesting with a one-year cliff, monthly thereafter — is as important for a CTO as for any founder, because so much of the company rests on them.
For founder shares, each holder should sign a section 431 election within 14 days of acquiring restricted shares, and the issue is an employment-related security reportable to HMRC. Under the Companies Act 2006, the terms belong in the founders' or shareholders' agreement. Crucially, a full IP assignment must put the technology the CTO builds into the company, not their personal account.
Worked example
Bea, a non-technical founder, has a robotics-inspection startup and no product. She recruits Kwame, a senior robotics engineer, to build it as co-founder CTO. He leaves a well-paid job and takes a token salary for the first year.
Given the founder risk Kwame carries — early, near-unpaid, essential to the product — they agree a 60/40 split in Bea's favour: Bea 60%, Kwame 40%, both as founder shares. It vests over four years with a one-year cliff, both sign section 431 elections within 14 days, and Kwame signs an IP assignment covering all his work.
Had Kwame instead joined a year later on full salary as a founding engineer, options over around 2–3% would have been the market-appropriate grant — the difference being the risk he did, or did not, take.
Where founders go wrong
Paying a salaried hire like a co-founder.
A brilliant engineer on market pay who joins post-launch is a founding engineer, not a co-founder. Low-single-digit options, not founder shares.Skipping vesting for the CTO.
The person building your whole product is exactly who you cannot afford to leave un-vested. Use the standard four-year schedule.Forgetting the IP assignment.
If the CTO's contract does not assign their work to the company, your core technology may not belong to you. Fix it before you raise.Ignoring the minimum-wage trap on low pay.
Equity cannot substitute for the National Minimum Wage where the CTO is an employee or worker. Take advice before agreeing equity-for-salary.
Related questions
How much equity should a co-founder CTO get?
A true co-founder CTO commonly holds somewhere between 10% and 50%, depending on stage, cash contribution and how much of the risk they carry. If they join at incorporation, work for little or no salary, and are essential to building the product, they sit near the top of that range. [More: How should co-founders split equity in a UK startup?]
How much equity does a founding engineer get instead?
A first technical hire who joins later on a salary — a founding engineer rather than a co-founder — typically receives 0.5% to 5% in options, not founder shares. The difference is founder risk: someone drawing market pay and joining post-incorporation is not taking the same bet.
Should a CTO get shares or options?
A co-founder CTO usually gets founder shares under reverse vesting from day one; a later founding engineer usually gets options, often EMI. Shares suit those taking founder-level risk early; options suit salaried hires who join once the company has some value. [More: What is reverse vesting?]
What vesting should a CTO's equity have?
The standard founder pattern: four-year vesting with a one-year cliff, vesting monthly afterwards. It protects the company if the CTO leaves early, and it protects the CTO by making the equity genuinely theirs over time. Vesting is essential precisely because so much rides on the CTO. [More: What is founder vesting and how does it work in the UK?]
Is a low or zero CTO salary a problem?
It can be. If the CTO is engaged as an employee or worker, National Minimum Wage rules require payment in money, and equity cannot count towards them. A genuine founder-director without an employment or worker contract is different. Take advice before agreeing equity in place of pay. [More: Can a co-founder work for equity only, without a salary?]
Your CTO's equity, vesting and IP assignment together decide whether you actually own the technology your company is built on — get one wrong and it surfaces in diligence at your worst moment. A SuLe solicitor can structure the CTO's shares or options, the vesting, and the IP assignment so it all holds up. Get your founder documents reviewed — book a free consultation and lock down the equity behind your product.
Keep reading: How should co-founders split equity in a UK startup? · Should advisors get equity — and how much? · What is founder vesting and how does it work in the UK? · Can a co-founder work for equity only, without a salary? · Do I need a consultancy agreement for a fractional CTO? · Who owns the IP my employees and contractors create?
Primary sources: Companies Act 2006 · GOV.UK — Tell HMRC about your employment related securities schemes
