If you run a dev agency long enough, you’ll eventually hear this line:
“We can’t really pay your full rate right now, but the upside is huge. How about equity or revenue share instead?”
On the surface, it sounds smart and “founder-ish”: trade some short-term cash for long-term upside. In practice, for most agencies, these deals are a distraction at best and a financial hole at worst.
This is a breakdown of why “work for equity” deals almost never make sense for dev agencies, and the narrow cases where they actually might.
Most Equity Offers Come From Zero-Revenue Startups #
Equity and revenue share offers usually show up in one specific context: tiny, early-stage startups that can’t afford your normal rates. They need an MVP, they’re excited, and they’re sure “this can’t fail”.
But if a company has no revenue, that equity is literally worth nothing today. You’re accepting a non-paying client in exchange for a lottery ticket that may or may not pay out years from now—while you still have payroll, hosting, and your own bills due every month.
A healthier rule of thumb: even thinking about equity only once a company is already doing at least low six figures in yearly revenue. Below that, you’re not “partnering”, you’re subsidising someone else’s experiment.
You Become a VC Without VC Math #
When an agency takes equity instead of cash, it quietly switches business models from “services company” to “investor with terrible diversification”. Venture capital firms look at hundreds of startups, invest in dozens, and expect only a small handful to meaningfully return the fund.
Your agency, on the other hand, might place one or two big equity bets a year. The odds that one of those becomes a breakout success are tiny. You’re taking VC-level risk with none of the portfolio theory, deal flow, or protection.
And if you’re doing this with a team, you’re not just investing time—you’re literally burning cash to build someone else’s asset for free.
Why Good Businesses Rarely Pay in Equity #
Here’s a useful lens:
- If a business is already making solid money, they know equity is expensive. They’d rather pay a fair invoice, keep ownership, and move fast.
- If a business is offering you a big chunk of equity for implementation work, it usually means the market doesn’t yet value that equity at all.
Strong founders are also picky about their cap table. They don’t hand out 5–10% to an external agency that ships an MVP and then disappears into other client work. If they do want you on the cap table, it’s typically as a genuinely embedded product/technical partner, not “our dev shop who also has some shares”.
When Equity Can Make Sense for an Agency #
There are edge cases where equity can be rational for a dev agency:
- The company already has meaningful traction (paying customers, stable revenue, real churn/retention data).
- You’re not just building an MVP—you’re effectively acting as a long-term product/engineering partner.
- You still charge enough cash to cover your team’s time and runway, and treat the equity as upside, not compensation.
- The relationship is structured more like a strategic partnership than a one-off build. Think multi-year roadmap, not 8-week prototype.
In these cases, you’re still a services business first. The equity is there to align incentives, not replace actual payments.
How to Handle “We Can’t Pay, But…” Conversations #
When a small founder pitches you equity or revenue share instead of money, a simple stance keeps you safe:
- Explain that your agency operates on cash-first terms because you have salaries and operating costs to cover.
- If you really like the idea and the founder, offer a tiny discount or a small performance component layered on top of a baseline fee—not instead of it.
- If they insist on pure equity: that’s a sign they’re not ready for an external engineering partner yet.
If you want to do “free” or discounted work to level up your portfolio, aim for established brands or real-world businesses—the kind of names and case studies you’re proud to put on your site and that actually help you close the next client.
The Short Version #
Dev agencies win by staying boringly healthy: predictable cashflow, clear scope, strong delivery, good relationships. Turning your team into a part-time VC fund for unproven ideas usually does the opposite.
If you ever accept equity, make sure:
- The business is already real.
- Your costs are fully covered.
- The deal looks like a deliberate strategic bet, not a rescue package for someone who can’t afford your services.
Your agency is not a bank, and it’s not a venture fund. Build great products, charge properly, and keep “equity dreams” as a rare, intentional exception—not the default.