>"But when you got funding and sharply reduced financing risk, you got yourself to a place where you don't have to pay the lead tech person a cofounder's equity grant."

I agree that you may not have to and if you don't you can still be successful. On the other hand, if you are making a hire to fill a key position for the long term, it may make a great deal of sense to do so because a person hired at or close to the market rate can by definition find an equivalent position elsewhere.

1% of the company probably won't amount to much once the risk of failure, liquidation preferences and future dilution are considered. Not to mention a potential lack of technical chops among the co-founders.

In my opinion, hiring a key position at or near market rate is an indicator that the company views the hire as filling out the organization chart rather than as finding the person who creates significant value to the company, i.e. another entrepreneur.

I'm not saying it is a bad offer, only that it isn't structured in a way which will satisfy someone with entrepreneurial ambitions.