@nbashaw expanding on my earlier comment, there is also a moral hazard issue. The non-technical co-founder who has put in no initial investment is incentivized

@nbashaw expanding on my earlier comment, there is also a moral hazard issue. The non-technical co-founder who has put in no initial investment is incentivized in the short term to squeeze out as much value as they can, since they have no skin in the game. I've actually seen this happen multiple times, but examples of squeezing out value could be: demanding more and more changes since the labor is free, scope creep, pushing for more features before sales start. It is just a bad setup -- all equity owners should have equal skin in the game so decisions are made in the best interest of the firm. "Free" equity causes bad behaviors.