As a technical CTO I can smell this a mile away and work it into SoWs, but I wonder how many non-technical co-founders fall into this trap.
When you need updates or Phase II, now the rates go up massively. No one else can change it and the outsourced dev agency now has a monopoly. Usually the non-technical CEO/founder will now have to find a new agency, who might pull the same trick or some variation of it. It can be subtle:
- You have no code
- You have code, but it wont compile
- You have code, it will compile, but not into the version you're declared success with
- You have code to the client/app, but not to the backend