Most weeks, someone asks if we'll build their MVP in exchange for equity. The pitch is always the same: "we don't have cash, but we have a 3% slice of something that'll be worth millions."
We say no. Always. Here's why, in order of importance.
1. Equity-aligned vendors stop being honest
A paid vendor will tell you your idea is wrong. An equity-aligned vendor has a mortgage on your idea being right. If we own a slice of your company, we will — consciously or not — defer to your bad calls because pushing back risks the relationship and the equity together. Your $5k/month freelancer will tell you your homepage copy is killing you. Your equity partner will agree it's "really compelling actually."
2. The math doesn't work for either side
A typical equity-for-MVP deal is "build for free, get 3-5%." The MVP costs us €25-60k of senior engineering time. If your company is worth €1M in 3 years, our 3% is €30k — flat or down on what we deferred. If your company hits €100M, we made €3M, but most companies don't. The expected value of the equity is roughly the cash we'd have charged, on a 3-year delay, with all the risk on our side.
For you: you're paying with the most expensive currency you have. A 3% slice today is worth a lot more if your company succeeds than the €25-60k we'd have charged.
3. We can't be many things to many companies on equity
If we own pieces of five companies, we can't focus. We can't be a real partner to any of them. We become a low-priority queue. The clients who pay us cash get our Friday-demo cadence and our 24-hour Slack response. Equity clients get whatever's left.
4. There's a better deal we'll always offer instead
If your idea is good and you don't have cash, we'll do an Audit at half price (still cash) and use the audit prototype as your fundraising demo. That's a 2-week engagement that gives you working code to show investors. If you raise — we get to know each other. If you don't — you have a working prototype and we're paid for our work.
That's the deal. We do it three or four times a year.
When we'd consider equity
Honestly: never as the only compensation. Sometimes as a kicker on top of cash, when the founder is someone we'd want to be in a foxhole with. But the cash has to cover our time at market rate. The equity is a bet, not a salary.
The version of this in your inbox
If you sent us an "equity-only" inquiry recently and got a polite no — this was the longer reasoning. Nothing personal. The structure just doesn't work, and we'd rather tell you that than take a deal we'll regret in six months.