A fractional CTO is someone who generally takes very little or no equity + salary in exchange for part-time work.
You’re able to get decades of experience from someone you may not be able to afford to have full-time, and have equity left over for future rounds/hires.
An experienced CTO has 20 or more years of experience and can cost from $250,000 to $600,000 per year. That same CTO in a 25% fractional model would cost you $60,000-$150,000 and you’d have access to them between 2 and 3 hours per day.
This gives you access to senior leadership you simply cannot get from a developer with limited experience pretending to be a CTO. And more money left over to pay developers to develop your product.
Below are some lists with some reasons for and against both models.
Reasons to get a full-time CTO
- More initial buy-in from early investors due to having a team fully committed to one cause
- Full access to them
- Feeling of “control”
Reasons to NOT get a full-time CTO
- The CTO you have in your first year is probably not the one you’ll have in your 4th, but they will have a lot of suddenly non-productive equity if they leave, meaning later investors won’t like the arrangement
- Cost too much equity, potentially becoming non productive equity a few years down the line when the work no longer matches their skills
- You will get a less experienced one for the same price when compared to the fractional model
Reasons to get a fractional CTO
- Up to 80% cheaper than a similarly experienced full-time CTO (up to 98% cheaper if you include lost equity!)
- Takes very little or no equity
- The CTO you have in your first year is probably not the one you’ll have in your 4th, but they will have a lot of suddenly non-productive equity when they leave.
Reasons to NOT get a fractional CTO
- Early investors may not like the arrangement
- Access to them is more limited, typically 2 days a week, or a few hours per day. You have to ask yourself if you’d rather have a rookie always around, or a grandmaster a few hours per week.
- You like a sense of control, even if not real
- Early investors may not like the fractional model, but future you and future investors will like not having 30%+ of equity become unproductive when the skills required for the job outweigh the skills your initial CTO has.
- A fractional CTO gives you access to leadership and decades of experience that you may not be able to afford full-time
- The full-time CTO you can afford may not have the skills you need them to have, especially true if they only have experience as a developer. The CTO role is not just a technical one, it’s 80% business, 20% tech.