[TuaAmin13]

I'd be concerned at the "former boss" part. Do you want to work for him again? Does he want a nice title and is hoping to piggy back off your work? What does your developer think of this potential new social dynamic in the business?

While you could always figure out equity (this is sounding like a first employee type thing, maybe a bit more because he's C-level), your investors may want him to occupy a board seat. There's you, and your designer currently. That's 2 votes and if you can't decide there's no tie breaker. So besides whatever equity you get your former boss gets to determine significantly the direction of your business. Can you handle that, with you and your designer being self proclaimed perfectionists? While obviously you have to trust anyone you bring in, can you trust him specifically? I'm betting you can always find a good sales guy if the answer is no.

EDIT: A final question you might have to ask yourself is: could you fire him as the CEO if he wasn't what your business needed to grow?