Why is a development Partnership better than an Equity arrangement?

  • An Equity arrangement gets you an amount of money to spend on your business project (such as developing your web application), in return for which you pay indefinitely with a share of your business.
    • It doesn't get you any special price on development of a custom web application
    • You still have the on-going maintenance and development costs for keeping your web application up-to-date
    • But the work of the equity provider finishes with (how do they say...) the investment of part of the children's inheritence!
  • The Partnership Developers do not take any share of your business.  So the differences are:
    • Your capital requirement will be reduced because the development costs are reduced.
    • Your capital requirement during development and in fact until your business becomes profitable are further reduced without any balance sheet liability: the deferred part of the development cost carries no interest, is not paid unless and until your business can afford it from the agreed development budget - even if that means it is never repaid.
    • On-going payments to the developers are for chargeable work invoiced (at a continuing discounted rate), not share dividends which are paid for no work.

In other words, Venture Capitalists take a percentage of your income forever, in return for a one-off investment.  As Partners, we take a percentage of your income forever, in return for discounting your original costs, postponing payment on much of the remainder, and using all the value of your continual payment to do all the continual development which you'd have to finance separately if funded by venture capital... and not at a premium rate but at a substantial discount.  The better option is, as they say, a no-brainer!