Equity is pretend money (until it isn't)

I don’t get emotionally invested in maybes.

A friend and I were on a call this week. She listed off six potential clients like she was reading a grocery list. I asked her which ones had actually sent a contract. She paused.

She had projects in the pipeline, potential clients, referrals, interesting convos that hadn’t gone anywhere yet. She wanted to know how to plan around all of it.

I told her I don’t.

I really only ask myself three things about any opportunity:

• Do I actually like working with these people?

• Is the money worth the headache?

• Is the project challenging?

Everything else is just possibility. And possibility doesn’t pay your bills.

What equity actually is

Partway through the call, we got into the thing that some people talk around: equity.

The word gets used a lot in fractional work circles right now. People are doing amazing work outside of full-time employment, and founders are increasingly reaching for equity as currency.

So let me say clearly what equity is: a bet on an outcome that hasn’t happened yet.

Equity in an early-stage company is essentially pretend money. It only becomes real under specific conditions:

• The company raises serious funding

• Someone buys it

• The founder has a strong enough track record that you actually believe one of those things will happen

I know this because I’ve done it. My rate at the time was around $12K a month. I took the deal, multiplied by four, and asked for equity worth $48K at current valuation — before they had raised a single dollar. They later raised an eight-figure round. Today, that equity is worth a mid six-figure amount on paper, with no liquidity event yet.

I’m not telling that story to brag. I’m telling it because it almost didn’t happen. And most of the time, it doesn’t.

What I learned doing it wrong first

Most equity deals don’t work out. What I learned: invest in the people you think are going to make it. That’s really it.

It sounds obvious until you’ve said yes to five companies because the idea was interesting, and watched four of them quietly disappear. You think you need to invest in every company you work with. You don’t.

Now I try to find one month out of the year where I can take that time and give it fully to a founder I want to bet on — help them build the product, design it, do the positioning, and put it out into the market. I look for someone who’s already moving, already talking to customers, and who doesn’t need convincing to ship. If I have to sell them on urgency, they’re probably not the one.

The only filter that matters

A friend and founder I’m in early conversations with right now is building something in a competitive space.

Here’s the thing: I don’t get excited about her industry. I get excited about her.

That’s the only filter I use when someone asks me to take equity instead of — or on top of — cash:

• Would I enjoy working closely with this person for a month or longer?

• If this company doesn’t work out, is she the kind of person who remembers who showed up early and comes back when she has real money to spend?

There’s a real tension here that doesn’t get talked about enough: cash is expensive when you’re starting out, and equity is cheap. But if the company makes it, that completely flips. Smart founders know this. The ones who truly believe in what they’re building are often reluctant to give equity away — and they should be. Any deal has to make sense for both sides.

Equity isn’t really about the rate. It’s about whether you believe in the person enough that the lottery ticket feels worth buying.

I stopped evaluating the idea and started evaluating the person.

The thing nobody says

Everyone pitches it the same way: “We just need a simple build over a few weeks so we can show it to investors.”

But the moment it actually works, a new job begins:

• Users can’t figure out how to log in

• Data isn’t showing up right

• Everyone wants new features immediately

• The legal and compliance stuff that got pushed off suddenly becomes urgent

• If the product deals with sensitive data — medical records, financial information, anything regulated — independent security audits can cost tens of thousands of dollars and take months

If you took equity instead of cash, the founder naturally assumes you’re still “on the team” for all of this. But you’re now taking money out of your own pocket in exchange for shares that might never be worth anything.

That’s the line I won’t cross.

Equity is only for the clearly scoped, time-limited part. If there’s ongoing work after the initial build, it gets paid in cash — full stop. And get the terms in writing:

• Vesting schedules

• Defined project scope

• Clear expectations on both sides

Four-year vesting is for employees. Mine vests when the defined scope is done.

What it comes down to

Earlier in my career I said yes to a lot of equity deals. Cash plus ownership stakes. Advisory roles. All of it.

Most of those companies were never going to have a big exit. But some of those founders were clearly going to keep building things for the next ten years — and the ones who treated early collaborators well came back with bigger budgets and better opportunities.

That’s the whole framework:

• Don’t hold time open for deals that haven’t started moving

• Don’t take equity on hope alone — take it on people

• When you find a founder you’d genuinely enjoy building with for a month, who you’d still want in your corner five years from now regardless of how this particular thing goes? That’s when the bet is worth making.

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Thanks for reading,
Gev

The Fractional Playbook is for independent operators and senior creatives building practices on their own terms.