Paying Your Dev Shop in Equity Feels Free. It Isn't.

You're three months from launch, cash is tight, and a dev shop offers you a deal: they'll build your MVP for half price, or even free, if you give them a slice of the company. It sounds like a win. No invoice, no stress, and you still get your product. Founders take this deal more often than you'd think, and almost all of them wish they hadn't.

The math doesn't work the way it feels

A $30,000 build for 5% of your company sounds like a discount. It isn't, because you're not pricing the equity at what it's worth today. You're pricing it at what you hope it's worth in five years. If your company is worth $20 million at exit, that "discount" build just cost you a million dollars. Cash has a price tag. Equity has a lottery ticket attached to it, and the agency gets to keep the ticket even after they've moved on to their next client.

The real cost shows up later, not now

The money isn't even the biggest problem. A messy cap table is. Investors doing diligence will ask who else owns a piece of your company, and "the agency that built our first version, we don't really talk to them anymore" is not an answer that builds confidence. You'll spend hours in your next raise explaining or buying back a stake that a vendor earned in six weeks of work, from people who have zero obligation to help you after the invoice (or the equity grant) clears.

There's also an incentive problem. A contractor paid in cash wants to finish the job well because that's how they get paid and referred. A contractor paid in equity has already been paid, win or lose, the moment the cap table updates. Nothing forces them to stick around for the bug that shows up in month four.

A few things to ask before you take this kind of deal:

• Would I give this equity to an employee for the same amount of work?
• Can I actually get this agency off my cap table later if the relationship ends?
• Am I solving a cash problem with a company-ownership problem?

If the honest answer to any of those makes you uncomfortable, pay cash, even if it means a smaller first version.

What we'd rather build

This is part of why Cedrix prices in cash, not in cap table. We'd rather build you something real for a fair price and let you keep every point of ownership for the people who'll actually be there in year three: you, your cofounders, your first hires. If budget is the thing standing between you and a working product, our free MVP build exists for exactly that reason. And if you want to talk through what you're trying to build before you commit to anything, get in touch.