Technical Cofounder Feels Underpaid: The Equity Talk

It usually starts with a silence that lasts a beat too long. Maybe it's after a late-night deploy, or during a casual check-in over coffee. Your technical cofounder says something like, "I've been thinking... I'm not sure the current split really reflects what I'm putting in."

Your stomach drops. Not because they're wrong — but because you don't know what to say.

When a technical cofounder feels underpaid, whether in salary, equity, or both, it's rarely just about the money. It's about feeling valued. It's about whether the partnership is built on a foundation that both people can stand on for the long haul. And if this conversation goes badly, it can unravel the entire company before it ever gets off the ground.

The good news: this conversation doesn't have to be a crisis. In fact, handled well, it can become the moment your partnership actually solidifies. Here's how to navigate it.

Key Takeaways

• Separate the emotional layer (feeling unseen) from the structural layer (unfair compensation) and address both explicitly, starting with acknowledgment before jumping into numbers.
• Build a shared facts document covering each cofounder's specific contributions, opportunity costs, and comparable market data so decisions are grounded in reality rather than feelings.
• Expand beyond the equity percentage by adjusting salary differentials, vesting acceleration, milestone-based equity, or decision-making authority to turn a zero-sum negotiation into a collaborative redesign.
• Use an established equity framework like Slicing Pie, the Founder Institute Method, or the YC equal-split approach as a neutral starting point for the conversation.
• Write everything down in a formal cofounder agreement immediately — if your equity split, vesting terms, and exit provisions aren't documented, they effectively don't exist.

Why Technical Cofounders Often Feel Undervalued

Before diving into tactics, it's worth understanding why this pattern is so common. It's not because technical cofounders are greedy — it's because the startup ecosystem has a structural blind spot.

The Visibility Gap

Business cofounders tend to do work that is visible by nature: pitching investors, closing deals, posting on LinkedIn, attending conferences. Technical cofounders, meanwhile, are often heads-down building the actual product — work that's invisible until it breaks.

This creates an imbalance in perceived contribution. When an investor says "great pitch" to the CEO, nobody in the room is thinking about the 14-hour day the CTO spent refactoring the backend so the demo wouldn't crash.

The Market Reality

Here's a number that matters: a senior software engineer in a major metro can earn $180,000–$300,000+ at an established company, with stock options, benefits, and zero founder risk. When a technical cofounder accepts a below-market salary (or no salary) in exchange for equity, they're making a bet — and they're acutely aware of how much that bet costs them every single month.

If the business cofounder was previously earning $90,000 and the technical cofounder was earning $220,000, an equal salary and a 50/50 equity split isn't actually equal. One person is sacrificing significantly more in opportunity cost.

The "Ideas vs. Execution" Myth

Some business cofounders quietly believe that the idea, the vision, and the business strategy are the hard part — and that the engineering is "just building it." Technical cofounders can sense this attitude even when it's never spoken aloud. And it's deeply corrosive.

Building a scalable product is not an implementation detail. It is the company, at least in the early stages.

How to Know If Your Equity Split Needs Revisiting

Not every feeling of being underpaid means the equity split is wrong. But some signs suggest a genuine structural problem:

• One cofounder's opportunity cost is dramatically higher than the other's, and this wasn't accounted for in the original split
• Roles have shifted significantly since the original agreement — the technical cofounder is now doing product management, design, and DevOps in addition to core engineering
• The original split was decided casually — over a handshake, during the excitement of starting up, without modeling different scenarios
• One cofounder is working substantially more hours over a sustained period, not just during a temporary crunch
• There's no vesting schedule, so there's no mechanism for the equity to reflect ongoing contribution

If two or more of these are true, the conversation isn't just warranted — it's overdue.

How to Have the Equity Talk Without Blowing Up the Partnership

Whether you're the technical cofounder initiating this conversation or the business cofounder on the receiving end, the approach matters enormously. Here's a framework that works.

Step 1: Separate the Emotional Layer from the Structural Layer

When a technical cofounder feels underpaid, there are usually two things happening at once:

1. An emotional need: "I need to feel like my work is seen and valued by my partner."
2. A structural problem: "The compensation framework doesn't reflect reality."

Both are valid. But they require different responses. Trying to solve the emotional need with a spreadsheet won't work. And trying to solve the structural problem with reassurance alone won't work either.

Start by acknowledging the emotional layer explicitly: "I hear you saying that the current setup doesn't feel fair to you. That matters to me, and I want to understand it fully before we jump into numbers."

Then move to the structural layer with shared data.

Step 2: Build a Shared Facts Document

Emotions are valid, but decisions should be grounded in shared facts. Sit down together (or asynchronously, if tensions are high) and document:

• What each person contributes: Be specific. Not "I do the tech stuff" but "I've built the entire MVP, manage our cloud infrastructure, handle all code reviews, and do 70% of the product design work."
• What each person sacrifices: Include opportunity cost. What would each person be earning at a traditional job? What savings have each of you invested? What other opportunities have you turned down?
• What the current agreement says: If you have one. If you don't, that's the first problem to solve.
• What comparable startups do: Research compensation data from sources like Carta's equity reports, AngelList salary data, or the Holloway Guide to Equity Compensation.

This isn't about proving who does more. It's about creating a shared reality that you can both point to when making decisions.

Step 3: Explore Multiple Levers, Not Just Equity Percentage

Here's where most cofounder equity conversations get stuck: both parties fixate on the percentage split as the only variable. In reality, there are several levers you can adjust:

• Salary differential: If one cofounder has a higher opportunity cost, a higher salary (even a modest one) can offset the gap without touching equity
• Vesting acceleration: Offer the technical cofounder a shorter vesting cliff or accelerated vesting milestones tied to product deliverables
• Equity rebalancing with a time component: Shift from a static split to one that adjusts based on tenure — for example, an additional 2% that vests over 2 years
• Advisor shares or bonus pools: Create a small equity pool that can be allocated based on extraordinary contributions
• Defined role evolution: Sometimes the real issue isn't money — it's that the technical cofounder wants a clearer path to CTO with corresponding decision-making authority

By expanding the menu of options, you move from a zero-sum negotiation to a collaborative design session.

Step 4: Use a Framework, Not a Feeling

There are several established frameworks for evaluating cofounder equity splits. None of them are perfect, but they're all better than guessing:

The Slicing Pie Model (Mike Moyer): Allocates equity dynamically based on the fair market value of each person's contributions — including time, money, ideas, relationships, and resources. This is especially useful for early-stage startups where roles are still fluid.

The Founder Institute Method: Uses a questionnaire to score each cofounder across categories like idea origination, domain expertise, commitment level, and responsibilities.

The Y Combinator Approach: Recommends equal splits for cofounders who are equally committed, arguing that the resentment caused by unequal splits usually outweighs the precision.

Pick a framework, run the numbers together, and see what it suggests. You don't have to follow it exactly — but it gives you a neutral starting point that isn't "I feel like I deserve more."

Real-World Scenario: How One Pair of Cofounders Navigated This

Consider the case of two cofounders — let's call them Maya (business) and Jordan (technical). They started their SaaS company with a 50/50 equity split and equal token salaries of $3,000/month.

Six months in, Jordan was working 60+ hour weeks building the product while Maya was working 35-40 hours on business development, which hadn't yet gained traction. Jordan had turned down a $210,000 offer from a public tech company. Maya's previous salary had been $85,000.

Jordan didn't ask for more equity. Instead, Jordan started disengaging — slower responses, less initiative, more time on a side project. Classic quiet resentment.

When Maya finally asked what was going on, Jordan was honest: "I feel like I'm subsidizing this company more than you are, and the equity split doesn't reflect that."

Here's what they did right:

1. They acknowledged the gap in opportunity cost was real, not a matter of opinion
2. They adjusted salary, not equity: Jordan's monthly draw went up to $5,500, while Maya stayed at $3,000, recognizing the market rate gap
3. They added milestone-based equity: Jordan would earn an additional 5% equity upon shipping the v2 product, vesting over 18 months
4. They wrote it all down in a formal cofounder agreement with clear vesting terms and exit provisions

Two years later, the company raised a Series A. Both cofounders credit that difficult conversation as the moment they became real partners instead of two people with a shared Slack workspace.

What Happens If You Avoid This Conversation

Let's be direct about the cost of avoidance. When a technical cofounder feels underpaid and the issue goes unaddressed, the typical progression looks like this:

1. Quiet resentment → decreased effort, emotional withdrawal
2. Passive signals → comments about other job offers, less enthusiasm in meetings
3. Ultimatum or departure → by the time the conversation finally happens, it's often too late for a collaborative resolution
4. Messy separation → without a written agreement, the departing cofounder may claim equity that the remaining founder disputes, leading to legal battles that drain the company

This pattern is so predictable it's almost formulaic. And it's almost entirely preventable.

Consider formalizing your agreements with a tool like Servanda before conflicts escalate — having a written, structured agreement makes these conversations about updating a document, not about redefining a relationship from scratch.

Five Things You Can Do This Week

If this article hit close to home, here's what to do next:

1. Schedule a dedicated conversation — not a side comment during standup. Block 90 minutes, no distractions.
2. Each person writes a contribution summary independently before the meeting. Compare them side by side.
3. Research comparable compensation data so you're working from market reality, not assumptions.
4. Pick one equity framework and run through it together as a thought exercise, even if you don't adopt it wholesale.
5. Draft or update your cofounder agreement to reflect whatever you decide. If it's not written down, it doesn't exist.

Conclusion

The equity talk is uncomfortable. There's no version of this conversation that feels easy in the moment. But the discomfort of a direct, honest conversation is nothing compared to the slow corrosion of unspoken resentment.

When a technical cofounder feels underpaid, it's a signal — not a threat. It means they care enough about the company to want the foundation to be solid. The worst response is silence. The best response is curiosity, shared data, and a willingness to redesign the structure so both cofounders can do their best work.

Your startup is only as strong as the partnership underneath it. Make the partnership worth protecting.

Frequently Asked Questions

How should cofounders split equity when one is technical and one is business?

There's no single correct split — it depends on each person's opportunity cost, time commitment, and the relative value of their contributions at the current stage. Use a framework like Slicing Pie or the Founder Institute method to score contributions objectively, and account for the fact that a technical cofounder leaving a $220K job is making a larger financial sacrifice than a business cofounder leaving a $90K role.

What do I do if my cofounder and I never signed a formal equity agreement?

This is the first problem to solve — schedule a dedicated conversation to formalize your arrangement in writing, including equity percentages, vesting schedules, cliff periods, and exit provisions. Tools like Servanda can help you structure and document a cofounder agreement so future disputes are about updating a document rather than relitigating verbal promises.

How do I bring up equity renegotiation without damaging the cofounder relationship?

Frame the conversation around shared data and fairness rather than personal grievances — prepare a contribution summary and market compensation research beforehand, and open by acknowledging that you want the partnership to work long-term. Approach it as a collaborative design session where you explore multiple levers (salary, vesting, roles) rather than demanding a specific equity number.

Is it normal to change a startup's equity split after the company has already started?

Yes, it's more common than most founders realize, especially when roles evolve, contributions shift, or the original split was decided casually without accounting for opportunity costs. The key is to make adjustments early — before quiet resentment sets in — and to document any changes formally with updated vesting terms.

What are the signs that a technical cofounder is unhappy with their equity or compensation?

Watch for disengagement signals like slower response times, reduced initiative, less enthusiasm in meetings, increased time on side projects, or casual mentions of outside job offers. These are classic indicators of quiet resentment, and by the time they escalate to an ultimatum or departure, it's often too late for a collaborative resolution.