How is it any different than any other startup compensating its employees or vendors with equity instead of cash? Generally it makes sense for an early stage company to convince its partners to take equity or equity like instruments instead of cash. This is preferable for a number of reasons including:

* Early partners are probably optimistic on the project (and hence why they're partners), and therefore want to participate in the upside.

* It aligns incentives, where early partners are heavily invested in the success of the project.

* It removes the cost, distraction and uncertainty of having to raise more cash to pay early partners by selling the equity to outside investors.