This article is for: Founders of software startups who have limited technical ability to code and create their products. They need to find a technical cofounder to bring their product to life.
Written by: Alex Senson, Ashley Burton, Tyler Boulanger
New entrepreneurs with big software ideas want to get started on development right away. After validating their idea, development involves forming a team and getting the product actually made. However, leaders without a strong background in software development will struggle to manage their team and communicate with them effectively.
With this in mind, non-technical founders often seek out a technical cofounder with software knowledge to lead their development team to success. If you find yourself in need of someone to fulfill this role, this article should act as a complete guide to find a technical cofounder for your software business.
Finding a technical cofounder can be a daunting process. There is no infallible method and many don’t know where to start. No matter what level of confidence you have going into the process, you should not be expecting the well-established developer you dreamed of to drop their six-figure paying job to work for nothing at your startup.
The current shortage of programmers has caused even junior programmers to see job offers as spam. Because of this, you’ll need to find someone who is passionate about your project and trusts you as a partner. By asking these six questions, you can position yourself to find the perfect technical cofounder for your software startup:
- What is a technical cofounder?
- When do you need a technical cofounder?
- Where do you find a technical cofounder?
- Who should be your technical cofounder?
- Why should they join you?
- How do you compensate a technical cofounder?
We will illustrate these ideas through case studies of companies and founders who work with the Altitude Accelerator network
- Case study: Andrew Opala from the Altitude Accelerator Board of Directors and Mississauga Investor Network
- Case study: Michel Paquet from Aetonix
- Case study: Ian Hayes from Causeview
- Case study: Jeff Lande from Lucky VR
WHAT is a technical cofounder?
An evolving role in development, culture, and communication
Key Takeaway: Technical cofounders are behind the development side of your business, a role that constantly changes as the business grows; duties may include coding, development team recruiting, establishing a team culture, and communicating business concerns to developers.
A technical cofounder is your partner in starting and building your software business. They are to be viewed as your equal; they manage the development team while you manage the business team. They generally get a large share in the business and are committed to its long-term success. This means that they are investing in both you and the proposed product; their shared passion should be what drives them to take this risk.
This position can be described through a variety of additional titles including Chief Technology Officer (CTO), Technical Lead, or Senior Developer; these roles are largely interchangeable though.
An ever-changing role in development
The role of a technical cofounder will likely evolve greatly over time. They may start off as the sole person in charge of development, whether that involves finding a trusted studio to outsource to or coding a minimum viable product (MVP) themselves. As the business grows, technical cofounder becomes much more of a leadership role than a developer role.
First, they are responsible for recruiting the development team. Growing businesses need to continuously grow their team if they wish to maintain the speed of their iteration cycle, which is made easier by additional funding during growth. Hiring may start off as finding suitable freelancers, but should eventually turn into finding talent to work in-house. Technical expertise is required to know what skills are required of the developers for your project.
Technical cofounders are also responsible for establishing the culture of the development team. This can be as simple as translating the organizational vision of the business team to developers, or just getting buy-in on their preferred software tools.
They also need to establish development standards to keep the code consistent and the developers accountable from day one; this includes the preservation of code they likely had a hand in creating. These duties may even extend as far as developing an IP strategy or development methodology for the software.
Perhaps the most integral duty of the technical cofounder is communication with you and the business team. They use their knowledge and expertise to translate your vision for the business into a realistic software project plan.
There is also the responsibility to take your input on customer pain points and business growth ideas and find a way to make it work from a software design standpoint. A technical cofounder’s communication and leadership skills are likely the trait that puts them one peg above the average software engineer.
Summary: WHAT is a technical cofounder?
- Start your business with you, managing software development
- Role evolves greatly as business grows
- Initially heavily involved in programming
- Manages recruiting and building team culture as company grows
- Communicates message of business leaders to development team
WHEN do you need to find a technical cofounder?
Consider your capabilities, technology, and long-term goals
Key takeaway: Technical cofounders are most valuable when you lack the technical skills to lead development yourself and your software relies on innovative technologies that will be continuously scaled in the long-term; the right technical cofounder can provide value to any startup.
If you search “should I find a technical cofounder” on Google, the results will include many articles with sharply contrasting opinions. There is no simple answer to this question; a common opinion is that a technical cofounder is not necessary, as many non-technical cofounders have found ways to guide their business to success.
However, technical cofounders are an incredibly valuable asset during the development process, especially if you have no technical skills yourself, and would surely increase the odds of survival at a software startup. There are several other considerations to keep in mind to give you a better idea of how valuable a technical cofounder would be to you:
Consider your own capabilities
Whether you can find someone you trust or not, you will need some technical guidance if you don’t have the necessary knowledge to lead the team yourself. Technical skills can be learned, but it requires a lot of time and effort to do so and likely will be unable to match that of a refined expert.
Technical expertise is required for hiring a development team, planning out the software’s design, measuring development progress, and more. Although a part-time advisor can assist in these areas, a technical cofounder brings full commitment to the business’ vision right from the outset and is available for constant communication as the business grows.
A technical cofounder is also valuable when you don’t have prior experience with a software startup or in the industry you hope to enter. They can bring insight and connections to help guide your decisions and avoid common pitfalls when you start the business. Additionally, the importance of validating your business with an MVP means you may require technical skills on your team to build a prototype.
Consider your technology
There are also ways to gauge the need for a technical cofounder based on the requirements of your specific startup. You first want to consider how dependent your business’ success is on a new, innovative software technology being developed. A technical cofounder is most valuable when they are leveraging their expertise to translate your idea into an advanced technology; they would still be useful for coordinating the development team on a simple software solution, however.
Consider your long-term goals
You can also inform your choice by exploring your long-term goals for the startup. The need for a technical cofounder is most obvious when your business is looking to continuously scale in the long term with no defined “end-point” of development in sight.
This way, they can maintain consistency in code quality and the company vision through development over time; simply outsourcing development involves shorter-term commitment and code that is difficult to transition between teams. Whether your goals are short-term or highly defined, having technical expertise is valuable in determining the best way to reach those goals.
Altitude Accelerator Case Study: Andrew Opala from the Altitude Accelerator board of directors and the Mississauga Investor Network
Andrew Opala has held a wide range of leadership and development roles at innovative software companies over the course of his career. After collecting a wealth of experience and knowledge from leading and founding startups, he now lends his wisdom to Altitude Accelerator clients through his position on the Board of Directors. Although there have been success cases where non-technical founders find success on their own in the software world, Opala advises in favour of increasing the odds of success by finding a technical cofounder.
He acknowledges that many non-technical founders don’t want a technical cofounder because they can lack personal skills or be averse to “going out and marketing the product,” but says data shows they are valuable. As of 2015, startups with a single non-technical founder secure any type of funding 49% of the time, compared to 76% when a technical cofounder gets involved.
Opala encourages those looking for technical cofounders to reach out to the Mississauga Investor Network for assistance. You can also attend cofounder dating events or post the opening on websites like Angel.co; more helpful websites are explored below. He also adds that investors prefer cofounding teams with an equally balanced capitalization table, showing that both will stay relatively engaged at the company.
Summary: WHEN do you need to find a technical cofounder?
- You don’t have the technical knowledge to lead development and require long-term support
- Your business’ success is dependent on developing a new, innovative software technology
- You want your startup to continue to grow and have open-ended long-term goals
In general, a technical cofounder is always a valuable team member if you are willing to share your business with them. The value they bring, and whether you need them, obviously depends on the cofounder. You may need to meet a lot of cofounders to find one that fits your team and is willing to join. Thus, the first step to find a technical cofounder is figuring out where to find them.
WHERE do you find a technical cofounder?
Going to developers online and offline
Key takeaway: Beyond your current network, there are a variety of events, cofounding websites, and social media platforms that can be used to find a technical cofounder. Just talk to as many people as possible!
Here you are. An eligible startup bachelor on the hunt for the cofounder of your dreams. You’ve decided that you’re in need of help to make your dream a reality. Your idea is fantastic, so it shouldn’t be hard to find someone who wants to get on board; as the saying goes, there are plenty of fish in the sea.
But where is this metaphorical sea? And how deep do you have to go to find the software developing fish?
Within your network
Though this search will likely involve venturing to many settings unfamiliar to you, the most obvious place to find a technical cofounder is right in front of you; they can be found in your existing network. This could include trusted friends, former classmates, or reputable coworkers. You’ve likely discussed your grand ideas over lunch or in the breakroom before, so there’s no harm in taking a hard look at those that you know best to determine if they are suitable to be your technical cofounder.
With trust being such a key factor in forming a cofounding relationship, starting a venture with someone you already know eliminates much of the uncertainty around whether you will be able to work together or communicate effectively. You are likely already familiar with their past work and can quickly vet out that step-cousin that’s run twelve failed startups. Even if no one in your network is interested, you can ask your network for referrals to someone they know who is trustworthy and may be interested.
This method does, however bare the risk of tainting an important personal relationship if the business goes sour; many see cofounding with family members as a very risky decision as a result.
Although this is one of the most ideal situations for finding a cofounder, it is also the least likely to come to fruition. If you do have anyone in your network that you would like to start a business with, you probably already knew that before reading this article.
Go to developers
Going back to the idea of there being many fish in the sea, it is very unlikely that one of those fish jumps out of the water onto your dinner plate. In order to get a fish, you need to find where they’re swimming, get bait that draws them to the hook, and reel them in. Metaphor aside, you need to go where the developers are if you want to find one to work with you. This requires a lot of research, especially for someone with no software development background.
There are thousands of software businesses, small and large, on the hunt for developers; any software engineer worth their salt is not searching the depths of the internet for a job. In order to gain a competitive advantage over others that are recruiting, you need to meet and interact with as many developers as possible. It is important that you remain open-minded to the options presented to you; judging people based on superficial characteristics may cause you to miss out on just the partner you are looking for.
It is easier to build a trusting relationship with someone in person than through a computer screen. By attending events you can get to know potential cofounders much more in-depth and build credibility in the field you’re trying to enter. It is obviously much easier to assess whether you could work with someone long-term in this setting. There are a wide variety of types of events where cofounding occurs, you just need to find the ones relevant to you in your area.
You can definitely meet like-minded entrepreneurs at events meant for those wishing to build a startup. While workshops and lectures are effective, there are even events that require you to form a team and build a startup together. Startup Weekend, for example, requires entrepreneurial teams to build a startup in a weekend using lean methodology. Local and regional business accelerators or incubators run events where startup leaders can network and share experiences. You can view upcoming events at the Altitude Accelerator here.
Tech & industry events
Tech events can range from local meetups, where people interested in technology can socialize in a casual setting; to huge conferences, where industry leaders can network and showcase the latest innovations. Either way, events are especially advantageous when they pertain specifically to the industry your business is in. While local meetups come with a lower price tag, they definitely don’t have the established talent that a conference would have.
Cofounder dating is perhaps the most ideal event to find a technical cofounder, as everyone in attendance is on a mission to leave with their dream cofounder. It involves giving a pitch of your business and the skills you are looking for to the others in attendance while they advertise their skills to you. Although the most well-known cofounder dating events are run by FounderDating, which was acquired by CoFoundersLab, there are likely similar events being run by other companies near your area.
Run your own event
The best way to gain recognition and exposure at an event is to be the person at the centre of it all. By organizing an event for people in the industry, you can get information about customer pain points, get advice about your idea, and assess industry trends all while searching for your cofounder. Though this would likely require a significant time commitment, one successful event could be all you need to find someone that fits your needs.
Five websites to find a technical cofounder
The most popular website for meeting a cofounder is CoFoundersLab, boasting a user base of over 400,000 potential cofounders according to their website. Its large user base comes from its acquisition of several competing services including Techcofounder, FounderMatchup, and FounderDating. CoFoundersLab helps you find whatever help you are looking for with your startup, whether that is a cofounder, team members, or advisors.
With a free membership, you are able to post your profile without any screening and search the whole network for your ideal partner. However, this plan only allows you to contact up to 5 cofounders per month. With their paid premium plan, you can contact an unlimited number; other premium features include suggested cofounders, priority in search listings, advanced filtering, and the ability to see who viewed your profile. You also receive perks from partners like Stripe, AWS, HubSpot, and Bench. For a higher price, the website offers access to a virtual incubator and a variety of educational modules
Upon creating your account, you can add information about yourself and what you’re looking for; other users can find you and make connections efficiently by filtering search results.
CoFoundersLab is the current go-to platform to find a technical cofounder and gives you access to the largest number of potential candidates available.
Founder2be has a smaller user base, at over 90,000 users, and functions very similarly to CoFoundersLab. The site differentiates itself by advertising its ability to act as a platform for launching your startup and meeting investors. Founder2be accommodates business professionals from all fields including marketing, designers, developers, and business developers to find a technical cofounder with the skill set you need for your startup team.
They have a premium service that adds additional services on top of the free account at a similar cost to that of CoFoundersLab. Although Founder2be placed an emphasis on finding funding and launching your startup on their platform, strong evidence of businesses doing this successfully could not be found. Therefore, this platform falls short of CoFoundersLab due to their smaller user base.
Much like Founder2be, Founders Nation is a very similar platform to CoFoundersLab but with less popularity. It was built to connect people hoping to change the world through innovative technologies. On this website, you can identify as someone looking for a cofounder to join your idea or someone who wants to cofound with someone else’s idea.
The platform is very simple, as you can browse through lists of people actively searching for a cofounding opportunity. A number of current users could not be found, but the site claims to establish 600 startups every year and be number two in the world for venture capital funding. It also provides discount perks for users on legal, finance, technology, and marketing consulting from partners. Overall, the site is 100% free but is a much simpler service compared to the others.
AngelList is not specifically meant to introduce you to a cofounder but can be a great place to meet technical professionals with interest in working at a startup. The site functions as somewhat of a combination of a social network and a job board, as you can make connections and post job vacancies at your business. There are over 29,000 startups present on AngelList, over 2,000,000 active job candidates, and over 4,400 startups that have hired from the site.
When searching for a technical cofounder, you just register as a recruiter and post the job opening; you can specify the requirements so applications are limited to those that would be a good fit. You can also search through profiles and use filters to sort through potential cofounders or employees. AngelList is one of the most common places for tech startups to gain exposure to investors as well. It is free to sign up and make a job posting on the site, so it is definitely worth it to do so!
CrowdForge is the most unique website on the list, acting as a platform where teams are created and managed for programming events. Over 300 events have used its services, including “Hackathons” and “Game Jams,” giving you insight into events where you can meet developers while getting access to a sea of potential cofounders.
For the purpose of finding a technical cofounder, you can post your business to the “projects” board in hopes that one of the developers using the site will stumble across it. If you wish to invest a lot of time in recruiting, you can even host your own programming event in a field related to your business just so you can meet and network with a diverse collection of software engineers. Though this website is more of a long-shot to find a technical cofounder, it is free and could prove effective if used creatively.
Professionals are putting more time and effort into their social media presence than ever before, and that includes software developers. Although websites geared toward finding a cofounder can be very helpful, the largest pool of potential candidates exist on the most popular social media platforms. Finding the right niche or community on these platforms can really immerse you in the software development community and help you find a technical cofounder.
Over 260 million professionals from around the world log into LinkedIn every month while 40% of those users do so daily. In all likelihood, any of your candidates for a potential cofounder can be found on LinkedIn. To find them, you can either post a job opening or search out users with the skills you require and message them. It may even be possible that you share a common connection who can give you an introduction. Although you may receive more rejection responses on here than on a site meant specifically for cofounding, the pool of talent available on LinkedIn is difficult to ignore. This is the most common social media platform on which to find a cofounder.
Reddit is organized into pages based around specific topics; they are deemed “subreddits” and follow the structure “r/…”. On a subreddit, you can sort threads according to the most popular ones and users vote on whether threads should be more or less prevalent. One example of a helpful subreddit is r/cofounder , where users start threads when they are looking for a cofounder and interested users can respond. By starting threads in a variety of relevant subreddits, you can access a wide range of users while spreading awareness of your business.
Finding a technical cofounder on Twitter would perhaps be the most difficult method if you do not have an existing following on the site. If you do have a significant following, tweeting out your idea and interest in a cofounder can be a quick way to spread the word if that is of interest to you. This is most effective when your following is composed of people in the field you wish to enter business in. You can build up this following by creating content that would be interesting to those in your field; using hashtags you can make sure like-minded people are the ones that see it.
Spread the word!
Whether you search for your cofounder through cofounder sites, social media, events, or all of the above, it is important to meet as many people as possible. This can get people talking and build a buzz around your product, which is obviously a good thing! Many entrepreneurs get worried that someone is going to steal their idea when they are spreading it around. However, you should be able to describe the problem you’re solving without giving away your exact solution; in many cases someone else has already thought of your idea anyway. You may also benefit from asking people “who else should I talk to?” after a conversation to continue growing your network. The key here is finding the right person to execute your idea successfully before anyone else can.
Altitude Accelerator Case Study: Michael Paquet from Aetonix
Michel Paquet is the CEO and founder of Aetonix, the company behind aTouchAway, a mobile platform for remote complex-care management. Though he has a strong technical background as a development manager at several other companies in the past, Paquet was looking to find a technical cofounder to lead development at his new startup. He had a very open mind going into the search, finding several young development team members at local tech meetups. He was looking for developers who shared his vision and were willing to grow as members of the team.
Despite one of the main drawbacks of young talent being their lacking reliability and the need to often redo code, Paquet chose that direction because of their energy and commitment. One of the young developers he hired was an 18-year-old who had never been to university; that’s far from enough experience for most recruiters. However, Paquet saw his potential, describing him as a “boy genius” with “flawless technical skills.”
During the interview process, he brought along a former coworker who told him “if you don’t hire him right now, I will.” That sealed the deal, as Paquet made the young developer his CTO. Despite his lack of formal training, the “genius” was able to act as a mentor to other new employees and has been a huge part of the company’s success to date, according to Paquet. The lesson here is that in your search you should keep an open mind, go where the developers are, and trust someone with technical skills that is committed to your vision.
Summary: WHERE do you find a technical cofounder?
- Current connections in your network are the most trustworthy cofounders
- You need to go to cofounders and not wait for them to come to you
- Meet as many people as possible and learn about who else to talk to
- You can meet good candidates at any events relevant to your business’ industry
- CoFoundersLab is the most popular website for cofounding but some other useful options are free
- Searching on social media gives you access to a huge amount of people but it can be difficult to use for recruitment when you’re not well-connected
- Don’t be afraid to spread the word of your search to as many people as possible!
WHO should be your technical cofounder?
The ideal traits of a cofounder and how to assess them
Key takeaway: Value commitment, reliability, and a shared passion, while also making sure your cofounder has the required technical and leadership skills. You can assess them by exploring their previous work and spending time getting to know them and their expectations.
With the challenges involved in finding a technical cofounder, you may be tempted to team up with one of the first qualified candidates who is willing to join you. However, cofounding with the wrong person can lead to disaster later on in development, whether that is because of conflicting visions or a lack of reliability. Because of this, you need to take a long, hard look at everyone you consider having as a technical cofounder.
Traits of the ideal technical cofounder
Shared vision and passion
If your cofounder does not share your passion for solving the problems your business is trying to address, it’s unlikely they will remain interested as the business grows over time. You need to ensure that your cofounder has aligned long-term visions of both how the product will evolve over time and how a business should be run. This way, you can count on them to invest years of their career and significant personal resources into growing the business with you.
Has the required technical background
Not only would it be difficult to develop themselves, but leading a team of developers would be very challenging for a cofounder that does not have the technical knowledge required to develop the software. It is important that you find out ahead of time what skills are required to develop the type of software that you want, or else you could be left with a product that’s completely different from what you envisioned.
Has experience in the field
Having a good reputation and experience in the industry you are trying to enter with your business is an invaluable resource. This knowledge can give extra insights into customer pain points and a better understanding of how the software needs to be designed to remedy them.
A do-er and a manager
As discussed earlier, the role of technical cofounder changes between developing themselves and managing other developers. Therefore, your cofounder needs to have both the technical and self-regulatory skills to code the software and the leadership skills to communicate directions and monitor the progress of a team.
Familiar and trustworthy
Most importantly, you need to be sure that your cofounder is a reliable partner that you can trust. This may be inherent if you’ve known them for a long time, but cofounding with someone you just met is risky if you haven’t taken the steps to ensure they are committed to your business in the long-run; assessing this trait goes much beyond making sure they seem nice in person.
Altitude Accelerator Case Study: Ian Hayes from Causeview
Ian Hayes is the CEO of Causeview, a company that provides donor management software to nonprofits and educational institutions that is built upon the Salesforce Cloud platform. After starting out as a consulting service that helped nonprofit companies integrate with Salesforce in 2008, Causeview has evolved into software products that now serve over 1,600 users around the world.
As a non-technical cofounder, Hayes was able to find a technical cofounder that leads software development. He admits that if he founded the company on his own, everything would have just taken much longer. If he had gained the technical knowledge himself, the product would likely be far more flawed. The two cofounders have much different skillsets that complement each other; talking to customers and clarifying requirements is a lot different than actually building the software.
When looking for a technical leader at your company, Hayes advises to look for someone with the ability to both manage and grow a startup team. They should also be able to “get the grunt work of development done themselves” and communicate with customers when necessary. Your technical cofounder or CTO should have both the mindset of “both a manager and a do-er.”
How to assess technical cofounder candidates
Get external opinions
You may not have the technical knowledge to identify whether a candidate’s skills are the right fit for your project. If that is the case, getting the opinion of someone you know who is a software expert would greatly help your recruiting process. They could sit in on interviews, help sort resumes, or judge the quality of past code.
Check their previous work
Many developers have their portfolio or some of their previous work posted online, which could definitely help their case if they’ve developed something similar in the past. You could even ask people who have worked with them if they would recommend them as a cofounder.
Value passions and trust over unnecessary skills
If your idea is just a simple web app for sharing cool pictures of watermelons, you don’t need to go tearing apart applications because they aren’t experts in six new coding languages and don’t have experience working at Google. Although some candidates may have some flashy skills, they shouldn’t be valued higher than someone else who would be committed to the business long-term if those skills aren’t necessary.
Take your time getting to know them
It is a completely different experience working with someone in person rather than online. Depending what kind of working dynamic you plan to have, you will want to make sure you are able to work with the candidate in that setting. This could mean going out to dinner to ensure you enjoy being around each other or giving them a small task online to test their reliability.
Be up-front with expectations
Above all, have a conversation about each other’s expectations with regards to working conditions, business operations, performance, and anything that you think needs to be aligned with your cofounder. Making sure everyone is on the same page before starting the business is the best way to avoid conflict later on and always be working toward the same goals.
Summary: WHO should be your technical cofounder?
- Someone with an aligned passion and vision for the project
- Someone with technical and leadership experience to both code themselves and manage a development team
- Check their previous work and get outside opinions
- Get to know them and make expectations clear from the outset
- Put a lot of value in trust and commitment
WHY should they join you?
Show off what you have to offer
Key takeaway: Showcase the traits that you would look for in a cofounder, make it clear why your business will succeed, and work together to see if they are a fit. Most importantly ignite their passion for solving the problem your business addresses.
When connecting with potential cofounders, you should approach the interaction with the same mindset you have when assessing candidates; think about your answer to the question “why would I want to work with you?” It is likely that you need them much more than they need you, so convincing them to join your new venture can be a tough task. Many entrepreneurs view finding a technical cofounder as earning a technical cofounder, since the process involves just as much proving yourself as it does recruiting.
As much as developers want to work at a business they are passionate about, working with a trusted cofounder is just as important. They will look for many of the same qualities you look for in them: trust, commitment, passion, and the required skills. It is your job to make it clear what your value is and why they should want to work with you; there is no chance they will work at a startup with a sketchy CEO no matter how amazing the idea is.
Business skills are obviously the main criteria they will be looking for, but simply saying “I’ll handle this business side” is not enough. Have documentation of your previous successes and experiences as a salesperson, marketer, entrepreneur, or other work that will showcase why you have the ability to grow and sell your idea.
You can also describe your expertise of the industry, including powerful connections, potential clients, and key knowledge of customer pain points. This can make your knowledge seem like the missing link between the potential cofounder’s technical skills and the customers that need a problem solved.
Other attractive traits include your communication skills, willingness to take risks, support from industry experts, or the ability to empathize with developers. Anything that makes you seem like the person required for this business to succeed is a useful piece of information in this interaction.
Make a strong business case
No one wants to join a business that seems destined to fail, especially when it will require a lot of their time and money. You need to show potential cofounders why the business is sure to succeed and what you’ve already done to get it started on that path.
Using your knowledge of the industry, you need to illustrate the problem that customers are facing and how your business will solve it. It is especially encouraging when you come with ideas of how the actual product will work and a full vision of what it could grow into.
In addition to an idea, you need to come with validation that people want the idea. Feedback from an already-built MVP is the best way to do this but there are several ways to quantify interest. Pre-sales, financial support, or any kind of experiment that tests interest in the company are also effective. Even a business model or a promising team in place would add credibility to your conversation.
This part is the most important to earning a technical cofounder; the more work you do to get your business on the path to success, the more enticing your business is to join.
Find the fit
If someone is going to join you as a technical cofounder, they don’t want to just be treated like a coder with a fancy job title. You need to emphasize how they are the perfect fit for making the startup a success.
Ideally this person is the perfect fit for your business, so you just need to draw upon what you know about their skills and interests to illustrate why they coincide with the software you’re developing. Much like recruiting, this may require input from an external expert. If the candidate isn’t actually a perfect fit for the business, you don’t need to lie or change your plans to get them on board; that’s a waste of both of your time.
It can help to treat the initial interaction as a request for advice with your product; that both strokes their ego and gets them into a conversation about your business. It also shows your desire to grow the business in an informed way. The most important gauge for finding a fit is passion, since the partnership is unlikely to end in success if you don’t share a passion for solving the problem your business addresses.
Summary: WHY should they join you?
- Showcase experience in business, leadership, communication, and the industry
- Show why your business will be a success and the work you’ve already done on it
- Illustrate why their skills and passion are the perfect fit, only if they actually are
HOW do you compensate a technical cofounder?
Assessing contributions of each cofounder
Key takeaway: Assess how much each cofounder has contributed to the business’ progress and the role they will be playing. Distribute equity accordingly or pay them a salary if you can afford it, though original cofounders will generally get equity.
When a technical cofounder joins your organization, it is not always clear how they fit in. This role usually depends heavily on what stage the business is at when they join.
If you’re still in the early ideation or validation stages of building your business, a technical cofounder would likely be viewed as an original cofounder from the start. If your business is at a later post-MVP or post-revenue stage, your technical cofounder would take on more of a hired CTO type of position.
These two situations may be very similar roles in development but have contributed different amounts of value to the growth of the business. It is important to assess how much of the business’ current progress and/or success can be attributed to each cofounder; then compensation can be determined.
Both a technical and non-technical cofounder add value to the business. If both are present from the start, it is likely that they have contributed equally to the company’s progress. Splitting responsibilities into business and technology “sides” can be very harmful early on, as communication and cooperation between the two factions is integral to developing the best product possible.
Cofounders will generally work for equity when they are completely committed to the long-term success of the business, much like you are. The amount of equity varies greatly depending on their contributions; an original cofounder from the start can hold anywhere from 30%-60% in equity while a paid CTO that joins later on could hold 1%-10%. These are just common values for compensation of these roles; cofounding situations are always unique and you will need to negotiate these yourself. Just remember, equity is a very expensive form of compensation, should you be successful in the future.
Contributions that earn more equity include creating the MVP, acquiring customers, securing funding, or contributing one’s own money. A tool like the Co-Founder Equity Split calculator at https://cofounders.gust.com/ provides an objective way to determine fair compensation for your technical cofounder.
If your cofounder is not part of the original founding team of the business, they will likely need to buy or be given shares of the company. This can be done through share options, contracts that entitle employees to buy or sell shares by a specific date. A vesting period is set that defines how long it takes for the cofounder to own the shares unconditionally; this allows the company to buy the shares back if the cofounder ends their employment before the vesting period ends.
Vesting periods can be time-based, where shares are earned over a specified time period; or milestone-based, where shares are earned when the cofounder completes specified milestones such as programming the MVP or hiring a development team. It’s always more preferable to have a milestone-based agreement to keep them accountable for their work; time-based agreements can be abused and leave you on the hook if your cofounder isn’t productive.
With commitment in mind, it would be wise to create a Shareholders’ Agreement when handing off equity to a cofounder. By getting this done ahead of time,ideally with the help of a corporate lawyer, expectations can be set from the start and detrimental future conflicts can be avoided.
Hiring a technical cofounder or CTO for salary can be very expensive for startups. Because of this, most will wait until the business is making significant revenue to bring in a paid technical lead. According to Glassdoor, Canadian CTOs make an average of $141k annually, though those at a startup may fall to $70k or lower.
On a startup budget, this can be difficult to afford. You may be able to get the cofounder to work for less salary if you offer them equity, though those searching for a salary will likely already have a specific value in mind. Salaried workers can also be enticed by share options with the company. Another option is to hire an advisor or consultant that will give you technical advice on a part-time basis; this gives you assistance at a more reasonable cost without the commitment of partnering.
Other options for compensation include bartered services, in which two parties exchange services or goods without exchanging money; or bonuses, extra compensation dependent on an employee reaching a specified achievement.
Those seeking a salary could potentially not be as motivated to put in the time and effort required at a startup, as they could just be working for the pay. The same could be said for a cofounder who works part-time alongside another job, as most of their effort could go towards the job that gets them more money.
In general, it is ideal to be compensating cofounders based on reaching milestones or specific progress measurements rather than time; this encourages efficient, timely work. When negotiating compensation that is a combination of salary with equity, those two values should have an inverse relationship.
Most early startups can’t afford for founders to take a salary, so most are just paid in equity as a result. Attracting a cofounder to work for no pay obviously takes far more convincing, but a cofounder willing to take equity is more likely to be passionate about the business and committed to its long-term success. That is not to say that a salaried cofounder is sure to leave you in the dust, but startups with a small budget should be reminded that they can succeed with the right cofounder.
Summary: HOW do you compensate a technical cofounder?
- Determine a cofounder’s role in the organization based on how much value they have contributed and what stage they joined at
- There are many free tools available online to calculate cofounder equity objectively
- Equity will be nearly even for original cofounders of the business, while those that join later will receive smaller shares or a salary
- Most startups cannot afford a paid CTO until they have made significant revenue, but those that do should base salaries on completing milestones rather than time
Patience is key
Being patient in this search is of utmost importance. If you can’t find a technical cofounder that seems like a good fit, then you just need to keep searching until you do. Working with the wrong person, whether they’re lazy, unqualified, or just hard to work with, can be a huge waste of time and money. Wait for a cofounder that shares your passion and can commit to your startup long-term.
With that said, that’s no reason to delay starting your business while you search. There is always work to be done at a startup that doesn’t require technical skill; you could even get your MVP developed so you can get started on sales. Remember, the more work you’ve put into your business, the more enticing it will be to potential cofounders.
Can’t find a cofounder after a long search?
If you’ve been searching for a technical cofounder for months on end without any success, it may be time to reassess how you are presenting yourself and your business. If no one trusts you as a partner, a customer won’t be able to either. If customer interest in your idea has been validated, the issue likely lies in how you’re presenting the opportunity.
This should not cause you to shy away from beginning development of your product. There are several ways to develop your software, so it may be time to start looking for an alternative. It’s possible that someone helping you with development, like a talented freelancer or a technical advisor, could grow into a technical cofounder role over time. To reiterate, patience is key but there’s always something to do in the meantime.
Altitude Accelerator Case Study: Jeff Lande from Lucky VR
Jeff Lande is the founder of Lucky VR, a company that builds online virtual reality casino games. He built the company around three of his passions: poker, technology, and entrepreneurship. Already having knowledge of the product’s subject matter, Jeff began the company with no technical cofounder or even any official development lead.
One of his key developers began working part-time at the company because he wasn’t sure if it would take off. He was attracted to the vision of the company and wanted to be a part of it, so he finally made the jump as the company started to grow. Over time, this developer evolved into the CTO as he continued to impress with his talent. This just goes to show that even when you can’t find a technical cofounder, you can get your company started and remain patient. If your company becomes worth joining, then the right CTO or technical cofounder will be along in due time.