How much equity should a CTO ask for?

I still remember the coffee-stained napkin where a non-technical founder once offered me “a meaningful slice” of his new venture — no salary for the first year, of course. He wrote down “30 %” in big hopeful letters. Looked impressive until I did the math on a post-money cap he’d already agreed to with an angel. My slice shrank to something closer to sandwich crumbs. That little episode keeps coming up whenever younger CTOs ask me how much equity they should push for.

Here’s the short version: equity is leverage against future outcomes, not a gold star on the org chart. The number itself only matters once you translate it into dollars under a few exit scenarios (I usually model three — modest acqui-hire, decent Series A exit, and the never-happens unicorn). Do that first; percentages make a lot more sense once you can see the possible wire transfers.

Risk drives the range, but “risk” isn’t just stage. A pre-revenue SaaS with steady user growth feels wildly different from a PowerPoint deck with zero users. I’ve seen post-traction seed companies negotiate their incoming CTOs down to single-digit grants (think 6-8 %) because the product already had paying customers. Hard to argue you’re rescuing a burning ship when the hull isn’t on fire yet.

Over time your slice will shrink — new rounds, option pools, maybe that surprise convertible note you forgot was lurking in the cap table. The trick is making sure the pie grows faster than your slice disappears. (I’ve botched this balance before; I could be wrong, but I think most first-time founders do.)

If you’re signing on for no salary and carrying the technical burden, you’re functionally a co-founder. I’d start the conversation around 25-35 % fully diluted. That sounds aggressive until you weigh the opportunity cost of working a year for free. Still, remember the CEO might be logging the same 80-hour weeks hustling investors and customers, so parity is a reasonable counter-argument. Hash it out early, preferably with a spreadsheet open.

Pulling a market-rate paycheque? Then 1-5 % is the usual battleground. Just mind the dilution math: your shiny 5 % can drift below 1 % after a Series B if you don’t negotiate refreshers or at least a seat at the dilution discussion (I learned that one the hard way).

Cap-table hygiene matters more than any headline number. Are you actually listed in the shareholders’ agreement, or are you holding a “handshake memo” your founder typed in Slack? If there’s no incorporation paperwork yet, pause development until it exists — otherwise you’re effectively donating code to a company that might never legally recognise you. I’m not entirely sure this advice scales to every jurisdiction, but it has saved me two separate trips to court.

As CTO you’re on the hook for every deploy, every crashed cluster, every investor demo that freezes mid-click. That responsibility should show up on the docs, not just the LinkedIn banner. Spell out vesting, cliffs, acceleration on change of control — future-you will thank present-you.

One last sniff test: if other “co-founders” are drawing salaries and skipping equity, something’s off. They’ll walk away with cash in pocket while you’re left hoping your phantom shares materialise. Equity only works when the pain (and upside) is shared.

These conversations feel awkward, but skipping them is worse. Treat equity like any other engineering decision: model it, test assumptions, document the outcome. Then get back to shipping.

Good luck — and if you prefer the video version, I rambled about CTO pay vs. equity here: