Technical co-founder or fractional CTO? The cost in pounds

If you want the answer before the argument: a technical co-founder costs you a share of the company, and a fractional CTO costs you cash. In the worked example below, a 20% stake in a company that raises two rounds and sells for £10 million is worth about £1.28 million by the end, while 18 months of a fractional CTO plus a developer costs about £194,000. Equity is the cheaper currency if the company fails and the dearer one if it works. Which to spend depends less on the price than on what you need: someone building full-time for years, or someone making the hard-to-reverse calls a day or two a week.

I sell fractional CTO time, so read this with that in mind. I’ve tried to make the case for a co-founder as fairly as the case for me, and for plenty of companies the co-founder is the right answer.

Two currencies, two different purchases

A co-founder and a fractional CTO are paid in different currencies, and they don’t buy the same thing.

A technical co-founder is paid mostly in equity: a share of the company, usually with little or no salary until there’s money to pay one. In return you get someone who works full-time, about 228 days a year, builds the product with their own hands, makes the technical decisions and lives with them for years. They own part of the outcome, and they have a vote.

A fractional CTO is paid in cash: a monthly retainer for a day or two a week. In return you get the technical decisions made by someone who has made them before, for as long as you need them, with notice on either side. They don’t build the product, and they don’t own any of it.

So the fair comparison isn’t a co-founder against a fractional CTO. It’s a co-founder against a fractional CTO plus whoever builds the thing, whether that’s a first engineering hire or an agency. That’s the comparison below.

What the cash route costs

Start with the fractional CTO. UK providers who publish their prices charge roughly £3,500 to £6,000 a month for a day a week; a dated table of UK fractional-CTO prices has every row. Take £4,500 a month, a round number inside that range.

Then the builder. IT Jobs Watch puts the median advertised salary for a UK software developer at £65,000, from 1,254 salaries quoted in the six months to 6 October 2026. Add employer’s National Insurance, 15% of everything above £5,000, and the minimum workplace pension, and a developer on £65,000 costs about £75,321 a year.

The cash route	18 months	4 years
Fractional CTO, a day a week at £4,500 a month	£81,000	£216,000
Developer on £65,000, with NI and pension	£112,981	£301,284
Total	£193,981	£517,284

Four years is in the table because founder shares often vest over three or four years, so it’s roughly how long a co-founder’s equity is meant to buy. If you want different inputs for the fractional side, the calculator in the price post uses the same arithmetic.

What the equity route costs

Now the co-founder. Say they take 20% of the company. That isn’t a recommendation, just a round number; change it and the arithmetic scales.

20% at the start isn’t 20% at the end. Each funding round sells new shares, and everyone’s slice shrinks. Assume two rounds that each sell 20% of the company, and the co-founder holds 20% × 0.8 × 0.8 = 12.8% by the time anyone sells, before any option pool, which shrinks it further.

What that 12.8% is worth depends entirely on the outcome:

If the company…	It sells for	12.8% is worth
fails	£0	£0
sells modestly	£2 million	£256,000
does well	£10 million	£1,280,000
does very well	£50 million	£6,400,000

So equity is the cheaper currency below a certain outcome and the dearer one above it. Against the cash route, the crossover comes at a sale of about £1.5 million for 18 months and about £4 million for four years.

If you’re raising money, you’re telling investors you’re aiming well above both. That’s the uncomfortable part. If the plan works, the co-founder was the expensive option. If it doesn’t, their share cost you nothing and the cash route’s £194,000 is gone.

Two things make the cash route less clean than it looks. The cash has to come from somewhere, and for most start-ups that’s investors: raising £194,000 at a £2 million valuation, before the money goes in, costs you just under 9% of the company. And a co-founder usually starts drawing a salary once there’s funding, so their equity isn’t their whole cost either. Neither changes the shape of the answer. Both narrow the gap.

What the equity buys that cash can’t

Capacity. A full-time working year is about 228 days. A fractional CTO on a day a week works 52. If what you need most is the product built, a co-founder brings more than four times the days, and they are the builder as well as the decision-maker.

Commitment. A co-founder’s money is in the same place as yours. When things go wrong at 11pm on a Sunday, an owner shows up. A retainer has hours and notice periods, and it should.

A founding team. Some investors want a technical founder on the cap table, particularly when the technology is the product. If yours do, that settles it.

Continuity. A co-founder who grows into the CTO role carries the history of every decision. A fractional CTO hands over, and something usually gets lost in the handover.

What the cash buys that equity can’t

Experience now. You’re buying someone who has made the hard-to-reverse calls before, on other companies’ money. A first-time technical co-founder may be making them for the first time, on yours.

Speed. A fractional CTO can usually start within a week or two. Finding a co-founder you’d trust with a fifth of the company and a vote can take months, and rushing it is the expensive mistake.

Reversibility. Ending a retainer means serving the notice period. Ending a co-founder relationship is a negotiation over shares, even with good leaver terms in place.

Help choosing. A fractional CTO can help you find and vet the co-founder or first senior hire you eventually need, then hand over. A good one plans their own exit from the start.

Equity for a fractional CTO

Some fractional CTOs take equity alongside their fees or instead of them, and at least one provider in the price table adds a share of growth to its retainer. It can align incentives. Three cautions:

• It makes the price impossible to compare. A retainer plus 1% of the company can’t be set against anyone else’s day rate.
• The tax-efficient route usually isn’t open. EMI options, the UK’s main tax-advantaged scheme, are for people who work for the company at least 25 hours a week or 75% of their working time. A fractional CTO on a day or two a week won’t meet that. Other options and shares are possible but are taxed differently, so take advice before you offer them.
• Treat it like a co-founder’s equity. Put vesting and leaver terms in writing, so a stake granted for one year of work doesn’t sit on your cap table for ten.

Which one, when

Choose a technical co-founder when:

• the technology is the product, for years, rather than a means to an end;
• you need someone building full-time now, not deciding a day a week;
• you’ve found a specific person you’d trust with a share of the company and a vote, and they want the job for the long haul.

Choose a fractional CTO when:

• the hard-to-reverse decisions, such as the stack, the data model, build or buy and the first hire, need a day or two a week rather than a full-time person (if you’re not sure, start with which kind of decision is actually on the table);
• you have, or are raising, the cash, and you’d rather spend that than equity;
• you haven’t found the right co-founder yet and want the early calls made well while you look.

And don’t give a developer a co-founder’s share to avoid paying a salary. If the company works, that’s the most expensive developer you will ever hire.

The sequence I’d usually suggest is a fractional CTO first, to make the early decisions and help you find the right co-founder or first senior hire, then a clean handover.

I sell fractional CTO time, from Bristol, which is why I’ve written this. What I offer, and at what price, is public.