You know a problem in your industry inside out, and people have told you they'd pay to fix it. One route is to partner with a studio that builds the software in return for a share of the business. Here's how that works, who it suits, and what to watch for.
What it means
Instead of paying the full fee, you give the studio a share of the company that owns the product. The studio puts in design and development. You put in the industry knowledge, the customers and the work of running the business. If the product succeeds, you both do well. If it doesn't, the studio has carried part of the risk with you.
It doesn't have to be all or nothing. A common middle ground is a reduced fee plus a smaller share.
Why a studio would do this
Because the right idea, with the right expert behind it, can be worth far more than a one-off fee. A studio that builds products for a living can spot a strong one, and is happy to share the upside. That also means they'll be choosy.
What we look for
- A real, painful problem that comes up often, not a nice-to-have.
- Evidence people want it. People asking for it, trying to fix it with spreadsheets, or saying they'd pay.
- A way to make money. Who pays, how much, and how often.
- You. Your knowledge of the industry and your access to the first customers. This is what makes it work.
Who brings what
- You: the problem, the know-how, the first customers, and selling and running the business.
- The studio: product design, building the software, launching it and improving it.
Being clear about this from day one avoids most of the arguments later.
How the share is agreed
Every deal is different, so there's no standard percentage. What matters is that everything is written down before work starts: who owns what, what each side has committed to, what happens if someone steps back, and how decisions get made. This is usually done with a shareholders' agreement. Take independent legal advice before signing anything.
An example of how it could be set up
Here's a made-up example to show the shape of a partnership. Every real deal is different.
Example · A physiotherapist's home-exercise app
A physiotherapist with twenty years in practice sees the same problem every week: patients forget their exercises within days, and paper sheets get lost. Several colleagues at other clinics have said they'd pay for a tool that sends patients short video plans and shows the physio who's keeping up.
- The company: a new limited company is set up to own the product, the code and the brand. Both sides hold shares in it.
- The physio brings: the exercise know-how, five clinics willing to try it, and the time to sell it and run the business.
- The studio brings: design, the first version, launch, and a set amount of improvement work after launch.
- The fee: a reduced fee plus a share, rather than a full fee or a share alone, because the physio wanted to keep a bigger stake.
- Written down before work starts: what gets built and by when, how many hours each side commits each month, who decides what, how shares are earned over time, and what happens if either side steps back.
The detail that matters most is the last one. A common approach is for shares to be earned over time, so if someone walks away after three months they don't keep the full share they'd have earned by staying. That protects both sides.
What happens if it doesn't work?
Most new products need changes before they find their customers, and some never do. A good agreement says in advance what happens then: whether the product is paused, sold or closed, who keeps the code, and whether either side can carry on alone. Agreeing this while everyone is excited is far easier than when things are hard.
Is it right for you?
It can suit you if you'd rather keep your cash, you want a partner who cares about the product succeeding, and you're happy to share the upside.
Paying the fee may suit you better if you want to own 100% of the business, you need it built quickly regardless, or it's a tool just for your own company rather than a product to sell.
Five questions to ask any equity partner
- What exactly will you build, and by when?
- Who owns the code and the product, and what happens to it if we part ways?
- What do you expect from me each month?
- How are decisions made, and who has the final say?
- Can I talk to someone you've partnered with before?
How to start
Start with the problem, not the deal. Tell us what goes wrong, who has the problem and why you're the person to solve it. If it looks like a strong fit for a partnership, we'll look at the business case together before anyone agrees anything. See what we look for in a partnership, or the fixed-price alternative.