The Three Models
When engaging technical help—whether a CTO, agency, or development partner—you'll encounter three payment models. Each creates different incentives and outcomes.
Equity
How it works: Technical partner receives ownership stake in exchange for reduced or no cash payment.
Typical terms:
- 5-20% for MVP development
- Vesting over 4 years, 1-year cliff
- Subject to dilution in future rounds
When it makes sense:
- Partner will stay engaged for years
- You can't afford to pay cash
- They bring more than code (network, experience, credibility)
Risks:
- Cap table complexity for future fundraising
- Misaligned incentives after initial build
- Hard to unwind if relationship sours
Revenue Share
How it works: Technical partner receives a percentage of revenue until a cap is reached.
Our terms (transparent and specific):
- Launch Track: Lower upfront cost + capped revenue share
- Funded Track: Higher upfront cost + lower revenue share percentage, also capped
- Exit option: Buyout available at any time to end the revenue share
- No minimums, no penalties—you only pay when you earn
When it makes sense:
- You want to preserve equity for fundraising
- You're confident the product will generate revenue
- You want aligned incentives without giving up ownership
Advantages:
- Partner is invested in your success
- Lower upfront cost preserves capital
- Clean cap table for investors
Cash (Fixed Fee)
How it works: Pay for development upfront or milestone-based.
Our terms:
- Launch Track: Fixed fee (14-day build)
- Funded Track: Custom scope (14-day accelerated build)
When it makes sense:
- You have runway or can fundraise
- Scope is well-defined
- You want maximum flexibility post-launch
Advantages:
- Clean transaction, clear end
- No ongoing obligations
- Maximum control
Comparing Real Scenarios
Scenario A: 20% equity for MVP
Assume MVP takes 2 months, startup raises Series A at a strong valuation.
- Partner's share value: Potentially millions
- Effective hourly rate: extraordinarily high (assuming 40 hrs/week)
You just paid millions for a product you could have bought for a fixed project fee.
Scenario B: Revenue share with us (Launch Track)
Assume startup hits significant revenue in year 2.
- Partner receives capped amount (cap hit)
- Founder retains full equity
- Clean cap table for future fundraising
Scenario C: Fixed fee
- Partner receives fixed project fee
- Founder retains full equity
- Clean transaction, clear end
- No ongoing payments even if you hit massive revenue
Questions to Ask
Before agreeing to any structure:
- What's the realistic upside? Model equity grants at various valuations.
- What happens if we part ways? Understand vesting, cliffs, and buyback terms.
- How does this affect fundraising? Investors will scrutinize your cap table.
- Are incentives aligned? Equity partners should stay engaged; cash partners deliver and leave.
- What's the effective cost? Compare all options at realistic outcomes.
The Founder's Framework
- Give equity to people who'll be with you for years and contribute beyond code
- Offer revenue share when you want to preserve equity but can't pay full upfront
- Pay cash when scope is clear, you have runway, and want maximum flexibility
The Uncomfortable Truth
Most "equity for MVP" deals favor the builder, not the founder. They're betting on your upside with limited downside. That should make you pause.
You don't have to figure this out alone. We never take ownership of your company. Fixed fee or revenue share with a clear cap—your choice. You keep 100% of your company. We build it right. That's the deal.