Guide
Embedded engineers: conversion, IP, equity and the fine print founders ask about
Once founders like an engineer, the questions change: can we hire them, who owns the code, can they get equity? Contract terms or IP came up in 10 of our 37 calls.
By the Lyra Capital team · · 3 min read
Embedded, contractor or full-time
We compare the three in contractors or full-time for your first engineers. The short version: hire full-time for the people who will own your core product long term, and use embedded engineers when you need to ship before you can hire.
Embedded is not managed delivery, which one founder asked about directly. A managed delivery shop owns the project and hands you output. An embedded engineer joins your Slack, codebase and standups and takes direction from you.
Can we hire them full-time?
Founders asked this in several calls, often before the engineer had started. It's a fair question, and every partner answers it differently. Ask what conversion looks like before you start, and get it in the agreement.
The other path is a clean handover. When Lucent hired in-house, its Lyra engineers handed off. Paraform went the other way and grew from 1 to 17 Lyra engineers around its own hires.
Equity
Founders asked whether an embedded engineer could get equity. Through Lyra, no: Lyra engineers are full-time Lyra employees, so there is no equity grant and no single-hire risk. Save equity for the people you hire to own the company's future.
IP, confidentiality and competitors
- IP assignment. Everything built for you should belong to you. Check the agreement says so.
- Confidentiality. Covered by contract, and in practice by giving access only to what the work needs.
- Competitor conflicts. Ask whether the engineer works for anyone else. Lyra engineers are deployed full-time to one team at a time.
Worker classification in enterprise deals
A founder selling to regulated enterprises asked whether a contractor arrangement would satisfy their customers' rules on who can work on production systems. Some enterprise contracts care whether the engineer is a contractor or an employee, and where they work. Read those clauses before you staff the work, and ask your partner who the employer is.
Leave, backfill and notice
- What happens when the engineer takes leave? Is cover provided?
- What is the notice period on each side?
- Is there a minimum engagement?
- How are hours and billing tracked, and how often are you invoiced?
- Can you add another engineer later, and how fast?
Get the answers in writing before you sign. They are much harder to negotiate later.
Questions founders ask
Can I convert an embedded engineer to a full-time employee?
It depends on the partner's agreement. Ask before you start and get the terms in writing.
Do embedded engineers get equity?
Usually not. Lyra engineers are full-time Lyra employees, so there is no equity grant.
Who owns the code an embedded engineer writes?
You should. Check that the agreement assigns all work product to your company.
What is the difference between embedded engineers and a dev agency?
An agency owns the project and hands you output. An embedded engineer joins your team's tools and standups and takes direction from you.
Based on Granola notes from 46 calls Nam Dao and the Lyra team held with founders about hiring engineers, 6 July to 7 November 2026. Names, companies and figures are left out. AI helped pull the questions from the notes, and each one was checked against its note. Facts about Lyra engineers are as published on lyratechnologies.com.au.