Should I be considered a co-founder? Co-creator? Anything more than CTO?

OP here: you're right, I'll concede the implied ego boost. It's a bit deeper in that I fear detachment because I'm 'just' the CTO. Because I'm not recognized as a founder I fall short in two ways (self imposed):

I'm thinking but not acting on what I could be doing as a founder - this goes way beyond handling CTO work and recognition
I'm distracting myself about the 10x payout the founders will make compared to me while we all work full time on this

Here's the result of this: I work full time committed as CTO; my work ethic would never let me compromise my integrity or quality of work. But when that's done, I take any productive time I can muster and am spending on another MVP that will put me in the place of (1) a founder and (2) with more equitable position amongst co-founders.

I suppose if I had both CTO plus co-founder work on my plate (1) and more favorable equity position (2) I too would only pull the co-founder title when it made sense. I don't care to flaunt it; but I don't like NOT having the option.

OP here: Would you help me better understand your position?

They've built some value before I joined and also reduced some risk- should they not be rewarded for this effort?

Cash is king- and because I cannot invest any cash due to my personal situation, is it not fair that cash investment is rewarded with additional equity position for the other founders?

Should not both of these above reduce my equity position to some extent (but not to an extent of employee)?

What criteria do you use to define a 'technical cofounder'?

I agree on your last statement, in that, you get what you negotiate and not what you deserve. But I also believe for any new venture all founders should be 100% committed and to do that you need a sense of fair distribution of equity and be considered a founder.

Cash is king, but it seems like they misused the cash before you arrived on consulting fees. Someone like you should have at least a 5% equity stake that remains undiluted.

This means that no matter how much money the founders raise, you will still own 5% of the company, while their shares will be diluted. Assuming that this company makes a lot of money, say like $100 million plus, then you will get at least $5 million for your efforts.

I doubt that will happen though as very few companies are that successful. If I were you I would act like I'm leaving and that might force their hand to give you more equity. If they don't bite, then you can always start your own company or work for another one since you have technical skills. They on the other hand, are screwed without you.

I never thought to set a limit on dilution for my shares. Thank you, I appreciate your perspective on this. This is useful feedback.

No problem. Typically, the option pool is free from dilution. So, out of that 10% of shares the employees are given stock and their stock remains at the same percent regardless of how many rounds of funding are raised. Founders can be diluted, but you're technically not a founder so I would bring this point up to them for sure.

The person giving the advice knows nothing about how investments work. There is no such thing as equity free from dilution.

Investors have an anti-dilution clause to their stake but only because the clause says that they will be ALLOWED to invest to up their stake in any round. If they choose not to put in extra money, they will be diluted as well.

+1

"Someone like you should have at least a 5% equity stake that remains undiluted."

Rofl. Who the hell would ever hire someone on that premise? OP please don't listen to this drivel, no one in their right mind would ever get offered this by any company at any point in time, more importantly no investor would EVER let it happen. The fact is you're not as important as you think. The company was derisked before you joined, your biggest issue shouldn't be your equity or non cofounder title, it should be that you don't have preferred shares you only have employee stock options.

How does he not deserve at least that much considering that he built the product?

I'm not saying he didn't deserve to get 5% when he negotiated his deal, but no one is EVER going to negotiate an equity deal for someone that doesn't get diluted in future rounds. You seem very naive or just plain stupid if you believe that is at all possible.

The only person OP can blame is himself for being a terrible negotiator, OR being in a position in his life where he had to accept the deal because of money/job problems. The fact is the actual cofounders derisked the project and put substantial money (equal to a seed round) into the business. There are a 1000 guys like OP who could have been hired to build the business, he's not a cofounder.

+1

The option pool is not diluted. You're the one who is ignorant. His 5% could come out of the option pool.

He built the <em>second</em> version of the product. The company was started and fully operational before he joined. Therefore, he's not a cofounder but an early employee.

OP here: I'm not sure if I somehow implied I have options. I have shares reverse-vested from join date with contingency for company buy-back (per vesting schedule) if I voluntarily leave or terminated for cause.

Based on this, I should have no complaints. Can I call myself 'co-creator' or is that still being selfish and I am simply the grunt CTO in your eyes? :)

CTO is a pretty hefty title. Calling yourself co-creator will get you laughed at in professional circles. You're either co-founder or not. But CTO is a pretty damn legit title - in fact often more valuable than co-founder since you could be a schmuck who came up with the idea but have no role in the company.

Sorry I didn't mean came up with the idea… I meant someone who happened to join the founders in starting up the company, but have no official role.

You mean like that guy who is suing the other Snapchat founders since he came up with the idea but didn't do much else and feels like he deserves some stock for it.

if you have preferred shares, you're a cofounder or atleast "the founding team". If you have employee options from the pool, you're likely employee #1 and got the raw end of the stick. Don't listen to the guy above who said you should negotiate for UNDILUTABLE shares, it simply doesn't happen it makes absolutely no financial/investment sense.

A cto, post "seed", post validation is not valued at 50%. This is a completely ridiculous assumption. The equity is based on the type of company/product being built and the value of the services with all things considered. For a basic understanding check an equity calculator and go from there.

++1