Most articles on this question come to the same answer: an agency builds, a fractional CTO leads, and many startups need both. That is true, but it does not help you decide. The useful question is narrower. When the agency says a sprint is done, who on your team can say whether it is?
If you can name that person, you may only need an agency. If you cannot, the agency is marking its own homework, and the first time you find out is usually when an investor, a customer or your first engineer looks at the code.
The difference in one table
| Fractional CTO | Development agency | |
|---|---|---|
| What you are buying | Decisions and oversight | People to build the product |
| Works for | Your company | Its own business, under a contract with you |
| Paid for | Time, usually monthly | A scope, a project or a team by the sprint |
| Writes most of the code | No | Yes |
| Decides what not to build | Yes, with you | Rarely, because less scope is less work for them |
| Checks the estimate | Yes | It writes the estimate |
| Hires your own engineers | Yes, writes the role and runs interviews | Usually not, it supplies its own |
| Talks to investors | Yes | Rarely |
| Ends when | You hire a full-time CTO or the need passes | The scope ships or the contract ends |
| Right when | Nobody senior is making technical decisions | The decisions are made and you need hands |
When an agency is the right call
An agency on its own is often the right choice, and a fractional CTO would be money spent twice. That is the case when:
- You have a technical co-founder who has shipped real software and can review the agency's work every week. Adding a second senior voice blurs who decides.
- The scope is well defined and low risk. A marketing site, a standard integration, an internal tool on common software, or a feature for a product whose architecture is already settled.
- You already have a technical lead and need overflow capacity for a few months.
- The work is a known type of product where good agencies have built the same thing many times and you can check their past work directly.
When you need a fractional CTO
A fractional CTO earns their fee when the expensive decisions have not been made yet, or when nobody on your side can tell whether they were made well. Typical signs:
- You are non-technical and about to sign the largest cheque of your first year with a build team.
- You have two or three agency quotes that differ widely and no way to tell which is realistic.
- The product is regulated, such as healthcare or payments, so access control, logging and data handling have to be designed in from the first week.
- Investors are asking how the product is built and what the technical risks are.
- An agency has already built something and you are not sure whether to keep it, fix it or start again.
When you need both, and how to set it up
For a first product built by a non-technical founder, the usual answer is both. The CTO writes the scope with you, chooses or vets the agency, checks the estimate, and accepts each sprint. The agency builds. Our guide to building your first product with a fractional CTO walks through the phases and how to scale CTO days up and down across them.
Three rules keep the arrangement honest:
- The CTO must not be paid by the agency. Ask directly whether they earn a referral fee or margin on the build. Independence is most of what you are paying for.
- Price the two separately. Kompella offers both fractional CTO services and MVP builds, and we quote them as separate lines so a founder can end one without the other. Ask any firm that offers both to do the same.
- Introduce the CTO before the build starts. A reviewer who arrives in month four, after the architecture is fixed, can only point at problems. One who arrives in week one can prevent them.
What to put in the agency contract
Whichever route you choose, these points decide whether you can walk away from the agency later without starting over:
- The code repository, cloud accounts, domain and app store accounts are in your company's name, with the agency added as users. Not the other way round.
- IP assignment is explicit: everything built for you belongs to you on payment, including design files and scripts.
- Weekly demos of working software, not status reports.
- Documentation and a handover are deliverables with a date, not a promise.
- A clear exit: notice period, what gets handed over, and in what state.
What each costs
We do not quote agency rates here because they vary widely by country, team size and scope. Get at least two quotes against the same written scope, and compare what each leaves out as well as the total.
Our own published prices:
| What | Price | Time |
|---|---|---|
| Fractional CTO, Advisory | $8,000 a month | 1 day a week |
| Fractional CTO, Fractional | $15,000 a month | 2 days a week |
| Fractional CTO, Embedded | $25,000 a month | 3+ days a week |
| MVP build, separate from CTO time | $50,000 to $150,000+ | 8 to 12 weeks |
| Technical due diligence | $15,000 to $75,000 | 2 to 8 weeks |
If an agency has already built it
Many founders reach this question after the build, not before. The product works, mostly, but something feels off: releases slow down, bugs come back, or the agency's next quote is larger than expected. Before you decide whether to stay, switch or rebuild, get an independent review of the code, architecture and accounts. That is what a technical due diligence review does, and our page on due diligence cost and timeline covers what it includes.
The short version
An agency is build capacity. A fractional CTO is judgment that works for you. If someone on your team can scope the work and judge the result, hire a good agency and write a careful contract. If nobody can, add a fractional CTO before you sign, keep them independent of the agency, and keep every account in your company's name. For more on working with technical people as a non-technical founder, see our founder's guide to working with a CTO.
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