If my founder is losing interest

A few months into the startup and I have a feeling my founder is losing interest/passion/ability to put large amounts of time into the business.

The reason this is tough, is because he's the technical (building) co-founder. I'm poised and ready for customer feedback and developing the business when the prototype is completed but the last few steps seem to be painfully slow.

If I'm having these problems now is it better to cut it before it's a serious issue or stick it out and try to inspire him back into the biz?

You have to confront him head-on. This can't fester. You can't have secret doubts. It's not fair to either of you.

If he's truly unmotivated, you have to make a gut call about whether it can be fixed. I don't agree with the answers above that say "You should motivate him." You don't motivate co-founders. Employees, maybe. Co-founders need to have the fire in the belly or this isn't going to work. Startups are too hard for founders who aren't 100% in it. However I also agree with answers above that it's possible he's in a temporary funk. Funks happen to all of us as well; that's normal. If that's the case, check out the excellent answers to this question.

You have to make the call which it is. That's tough and there won't be an objective measure.

I don't envy your position, but you have to nip this in the bud.

Doing the finishing touches of a product can take a lot of work. Among other things, you should definitely consider putting a crappy version of your software up for others to use.

Additionally, I would suggest starting getting customer feedback, even before the product is ready. Use screenshots and product features to talk to potential customers (or online surveys) to see if there is a resonance between your startup and their problems. Not only will this motivate your technical founder but it will also help make sure you are in the right direction.

You should read up on having a Minimum Viable Product and consider the book The Four Steps to the Epiphany by Steve Blank. Finally, you should always consider what your backup is - what if your founder decides to walk out. If he thinks that there is a long journey ahead that he doesn't know if he wants to be part of - make sure he allows you to still build it and reward equity to those who want to take it the rest of the way. If you haven't you should read up on reverse vesting, and try to get your partner to agree to something similar to it.

Did you ever read the (now very old) book, The Soul of a New Machine, by Tracy Kidder?

In the book, Kidder describes the design and creation of a new mainframe. At one point, when the product is almost ready, the manufacturer takes all the engineers off the project, and brings in a new set. Why? Because they felt (and I truly believe) that engineers fall into two categories: starters and finishers. Starters get all excited about doing something new, and making it happen, but they tend to lose interest when the concept is proven and the system is "more or less" complete. Finishers may not have the creative drive of starters, but they do have an obsession for seeing things through to the end. Finishers won't be happy until every blinking light and logo decal looks exactly like it's supposed to.

Where I'm going with all this is that perhaps your partner is a starter. That would be pretty common in the entrepreneurial space. You don't want to lose him -- he's the one who's going to keep bringing you fresh ideas and making them come to life. But you may need to bring on somebody else, not necessarily a third founder, who is there just to put the finishing touches on your products.

Just a thought.

Maybe its just that the final stages of development can be the most difficult? Maybe he wants it "perfect" before he releases it to an unforgiving world - if this is the case you need to challenge him - it will never be perfect, get it out in the world asap, the feedback you get from real live customers will be better than anything you could think up yourselves.
Maybe he is just suffering from stage fright/pre-fight nerves and needs bigging up a bit.
What ever the case you need to talk it out now.

Why don't you ask this directly to that technical co-founder? Listen and motivate him.

Lack of motivation is a common problem, and people do went out of loop for a while and come back with a fresh perspective and energy.

Your best ROI is to dig deeply into the question "Why? " Indeed, the five "Why?"s.

It's going to cost you a lot to switch horses midstream. That cost justifies a substantial investigation/effort on your part. Most importantly, by doing the investigation, you build your own toolset for avoiding the same mistake in the future.

The honest answer to this question gives you the information you need to move forward: If my cofounder is not passionate, is it because he thinks the business will not succeed? Because he thinks I am not doing MY job? Because he's not having fun? Because he's a perfectionist? Because he has a substance abuse problem?

This type of information is invaluable. And each answer gives you a much clearer choice: How much work will it take to help him get beyond this problem? Or what will it cost not to address this problem?

Are you able to do any kind of product evaluation / testing with prospective users and customers before the prototype is ready? Sideshows, demos, simple conversations and discussions of the benefits?

Perhaps you can use the positive feedback and clear need for something that changes their world as an extra way to keep your technical founder inspired and motivated. Being reminded of the real value and joy that your product will create is easy to overlook when you're neck-deep in code or parts.

This is a great example of what can happen when founders do not enter into a comprehensive Joint Venture Agreement (JV Agreement). JV Agreements can save businesses as well as the relationship of co-founders. A well drafted JV Agreement will cover issues concerning commitments of each partner (such as time, money, effort), expectations of each partner, what happens when one partner is unable or unwilling to perform, etc. The JV Agreement will also reduce the risk of misunderstandings going into a project and further down the road. When the stress rises, people tend to forget what they promised. With commitments in writing, such forgetfulness is not possible.

Discussions concerning the issues set forth in the JV Agreement, help to bring out what each party really wants, expects and is willing to do and risk. The sooner you enter a JV Agreement the better. Typically it is much easier for parties to come to agreement on most matters prior to operations versus after operations commence.