How much equity should a technical co-founder get?
Short answer
A technical co-founder who starts with you and commits full time should usually get an equal or near-equal share of the founder equity, because the value lies in years of execution, not the idea. Less is fair when they join after the product or funding exists, take a full salary or put in no cash where others do. Whatever the number, put it on vesting with leaver terms, and take UK legal and tax advice first.
By Dr. Dulan Dias, co-founder and CTO of Tellme AI
Key facts
- Carta's Founder Ownership Report 2026, published on 12 March 2026, found that even equity splits rose in 2025 to 27.3% of three-founder teams, from 21%, and to 16.7% of four-founder teams, from 10.8%.
- The same Carta report found the median founding team holds about 56% of fully diluted equity by its seed round and 36% by Series A, based on rounds raised from 2021 to 2025.
- Michael Seibel of Y Combinator wrote in December 2015 that YC almost always recommends equal equity splits among co-founders.
- In the 2023 edition of the BVCA's model Series A documents, the standard founder vesting schedule was 48 months with an optional one-year cliff, according to a Slaughter and May briefing of 13 April 2023.
- From 6 April 2026, most companies with gross assets of £120 million or less and fewer than 500 full-time employees can grant EMI options if they meet the other conditions, up from £30 million and 250, and each employee can hold up to £250,000 of EMI options in a 3-year period.
- HMRC's manual says an employee who, with associates, holds more than 30% of a company's ordinary share capital has a material interest and cannot be granted EMI options.
- A section 431 election must be made jointly by the employer and the employee within 14 days of acquiring restricted shares, according to HMRC's Employment Related Securities Manual.
- As of April 2026, SEIS income tax relief is 50% of up to £200,000 invested a year, but it is not available to an investor who, with associates, holds more than 30% of the company's shares or voting rights.
Definitions
- Vesting
- Earning shares or options over time, so that someone who leaves early keeps only part of their stake. In UK startups founders usually own their shares from the start, so founder vesting is written as leaver provisions.
- Good leaver and bad leaver
- Categories in a company's articles or shareholders' agreement that decide what a departing founder keeps. A good leaver typically keeps vested shares; a bad leaver, as the documents define it, can lose more or all of them.
- Cliff
- A minimum period, often one year, before any shares or options vest. A founder who leaves before the cliff keeps none of the shares subject to vesting.
- EMI (Enterprise Management Incentives)
- A UK tax-advantaged share option scheme for qualifying companies. Employees who meet its conditions can buy shares later at a price fixed at grant, with no income tax or National Insurance on exercise if the price was at least market value.
- Section 431 election
- A joint election under section 431 of the Income Tax (Earnings and Pensions) Act 2003 that treats restricted shares as unrestricted for tax purposes. It must be made within 14 days of acquiring the shares.
Is there a standard equity share for a technical co-founder?
No. There is no market-standard percentage for a technical co-founder, and any single number you read ignores the factors that should decide it. What the data does show is a move towards equal splits.
Carta's Founder Ownership Report 2026 found that 27.3% of three-founder teams split equity evenly in 2025, up from 21% the year before, and 16.7% of four-founder teams, up from 10.8%. Carta's figures describe startups that manage their equity on its platform, so read them as a direction of travel rather than a UK benchmark.
Y Combinator has long argued for equal or near-equal splits. In a December 2015 essay, Michael Seibel wrote that YC almost always recommends equal splits, because a valuable company takes years to build and execution matters more than who had the idea. That is the right default when a technical co-founder starts with you and commits full time.
What moves the number up or down?
Start from equal and adjust only for differences both founders can name. These are the ones that justify it:
| Factor | Argues for more | Argues for less |
|---|---|---|
| When they join | At the start, before a product or funding | After launch, revenue or a round, when much of the risk has gone |
| Commitment | Full time from the start | Part time, or full time only after funding |
| Salary | No salary, or well below market | A full market salary from day one |
| Cash invested | Money in on the same terms as the other founders | No cash at risk |
| What they bring | Existing code, IP or a technical reputation investors value | Starting from nothing while others bring customers or IP |
| Role | The technology is the product and they lead it | The technology supports a business others built |
What should not move it?
Two things should not move the split: who had the idea, and who negotiates harder. An idea is cheap next to the years of work that follow it, and a split one founder resents in year two costs more than any percentage point won in week one.
Dilution should not drive it either. Carta's 2026 report found the median founding team holds about 56% of fully diluted equity by seed and 36% by Series A, so every percentage shrinks with each round anyway.
A worked example: what vesting does to a 50/50 split
This example is illustrative, not market data. Assume two founders each hold 50% of the shares, both on a 48-month vesting schedule with a one-year cliff, and no investors yet.
- The technical co-founder leaves after 9 months. Nothing has vested under the cliff, so all their shares can be taken back on the agreed leaver terms and offered to a replacement.
- They leave after 30 months as a good leaver. 30 of 48 months have vested, which is 62.5% of their shares, or 31.25% of the company. The other 18.75% is lost or bought back, depending on the agreement.
- They leave after 30 months as a bad leaver. Depending on the agreement they may lose some or all of their shares, vested or not, which is why the bad leaver definition matters as much as the percentage.
- With no vesting, a founder who leaves after 9 months keeps 50% of a company the other founder must now build alone.
How do vesting and leaver terms work in the UK?
In the UK, founders usually own their shares outright from incorporation, so vesting is written as leaver provisions in the articles of association and shareholders' agreement. They set out what happens to a founder's shares on leaving: how many count as vested, who can take the rest and at what price.
The BVCA, now UK Private Capital, publishes model Series A documents that it encourages companies and investors to use as a starting point. Slaughter and May's April 2023 briefing on that edition said the standard founder vesting schedule remained 48 months, generally negotiated, with an optional one-year cliff; good leavers lost unvested shares but kept vested ones, and bad leavers lost all their shares. The documents were revised again in February 2025, so read the current edition rather than older summaries.
Because leaver provisions can force a founder to give shares up, founder shares held by a director or employee can count as restricted securities for tax. HMRC's manual describes a joint section 431 election, signed by the company and the individual within 14 days of acquiring the shares, which removes a possible income tax charge later. Founders are often advised to sign one when shares are issued and their value is lowest; ask an accountant whether it applies to you.
Founder shares or EMI options?
A technical co-founder who starts with you should hold founder shares. EMI options suit later joiners and first employees, and the tax rules partly decide which applies.
| Founder shares | EMI options | |
|---|---|---|
| What you get | Ordinary shares, usually issued at nominal value when the company is formed | A right to buy shares later at a price fixed at grant |
| Who it suits | Founders who join at or near the start | Employees and late-joining co-founders |
| Limits | No scheme limit; leaver terms apply | Up to £250,000 per employee in 3 years, and no grant to anyone holding over 30% |
| Tax | Shares received because of a job are taxed unless a scheme applies, so a late issue at a low price can create a bill | No income tax or National Insurance on exercise if the price was at least market value at grant; Capital Gains Tax may apply on sale |
| Time commitment | Set by the founder agreement | At least 25 hours a week or 75% of working time |
UK details to check as of November 2026
Five UK details change the answer for some founders, and they are easy to miss:
- The 30% rule. A day-one co-founder with a large stake cannot be granted EMI options, so they hold shares instead.
- Northern Ireland. HMRC's manual says companies with a registered office in Northern Ireland that trade in goods or electricity keep the pre-April 2026 EMI limits and exercise period.
- EMI2. The scheme formerly called the Company Share Option Plan has been called EMI2 since 28 October 2026, for companies of any size and sector, with a lower limit per employee than EMI.
- Late joiners. If the company already has real value, ask an adviser whether EMI options, shares with a section 431 election or another structure suits a late co-founder best, and agree title and decision rights at the same time; technical co-founder vs CTO explains why that matters.
- Advice. This page explains common UK practice; it is not legal or tax advice. Take advice from a solicitor and an accountant before issuing shares or options.
Frequently asked questions
Should co-founders always split equity 50/50?
Not always, but equal is the right starting point for founders who start together and commit fully, and any difference should rest on a reason both can name, such as joining later, drawing a salary or putting in cash. Y Combinator has recommended equal or near-equal splits since at least 2015, and Carta's 2026 data shows even splits becoming more common. A small difference both founders accept beats a perfect formula one of them resents.
How much equity should a technical co-founder get if they join after launch?
Less than a day-one founder, because some of the risk has already been taken, but enough to make them a founder in substance rather than a senior employee. There is no reliable public benchmark for late joiners in the UK, so negotiate from what is already built, what is left to build, salary and commitment. Use the same vesting and leaver terms as the other founders, starting from their joining date, and check the tax position before shares are issued.
What happens to a co-founder's shares if they leave in the first year?
With a one-year cliff, a co-founder who leaves in the first year normally keeps none of the shares subject to vesting, and the leaver provisions say who can take them and at what price. Without a cliff or vesting they keep everything, which is why investors look for these terms. The details, including what makes someone a good or bad leaver, are whatever your articles and shareholders' agreement say.
Do founders in the UK need a section 431 election?
Often, when their shares carry leaver provisions and they are directors or employees of the company. The election is signed jointly by the company and the individual within 14 days of acquiring the shares, and treats them as unrestricted for tax, which can remove an income tax charge later. Because the deadline is short and missing it cannot be put right afterwards, agree it with an accountant when the shares are issued.
Can a technical co-founder be given EMI options instead of shares?
Yes, if they are an employee who meets the EMI conditions: working at least 25 hours a week or 75% of their working time for the company, and holding no more than 30% of the ordinary share capital together with their associates. The company must qualify too. That suits a co-founder who joins later. A day-one co-founder with a large stake usually cannot qualify and holds ordinary shares instead.
Can a technical co-founder get SEIS relief on money they invest?
Only within the connection rules. As of the April 2026 guidance, SEIS income tax relief is 50% of up to £200,000 invested a year, but an investor who, with associates, holds more than 30% of the company's shares or voting rights cannot claim it, and employees who are not directors are excluded too. Many co-founders hold over 30% and so cannot claim; check with an accountant before relying on it.
Should a technical co-founder take less equity in exchange for a salary?
A full market salary from day one reduces the risk a co-founder carries, so it can justify a smaller share. Most early startups cannot afford that, and founders usually start on little or no pay until funding. If one founder needs a salary and the other does not, make the equity difference explicit and agree when to revisit it, for example at the first funding round, rather than fixing it permanently on day one.
Sources
- Carta, Founder Ownership Report 2026 (12 March 2026)
- Y Combinator, How to split equity among co-founders (2015)
- Slaughter and May, The BVCA's new standard form model documents (13 April 2023)
- GOV.UK, Enterprise Management Incentives: EMI and EMI2
- HMRC, ETASSUM50500: EMI, Finance Act 2026 limits and exercise period changes
- HMRC, ETASSUM53040: EMI eligible employees, material interest
- HMRC, ERSM30450: restricted securities, elections
- GOV.UK, Venture capital schemes: tax relief for investors
About the author
Dr. Dulan Dias is co-founder and Chief Technology Officer of Tellme AI in Belfast; founder of EchonLabs, grown from 2017 to more than 60 people before its acquisition in 2026; holder of a PhD in AI and data science from Queen’s University Belfast; and the author of From Model to Product.