Their approach can work, it's just a matter of whether you can find product/market fit before the money runs out. If you contract out the development you're screwed when you can no longer pay them.

We may be the exception, but I came on as the tech lead after v1.0 and v2.0 were built out by a foreign shop and paying customers had been identified.

This meant that the original founder was able to keep more of the equity since I was given a salary and my risk was greatly reduced in coming on.

Eventually you will probably need a full-time technical person, but you have to make the judgement call as to whether you can get traction before the initial money runs out.