If you're going to be "doing it for free" you want to make sure what "it" is. Software NEVER ENDS. Say you do the prototype, they talk to a few people, they come back with another list of features - how do you tell them no at that point? Even a fixed quote on this sort of project is risky unless you really nail down what you're building.

Quote them on the prototype and do the bare minimum they'll need to sell it into the market. Don't sign over your IP for the code (remember - if you write it, you own it).

Once they've got some runs on the board, then negotiate equity in the product because at that point you have equal power - they have the clients, you have the product.

I would strongly advise against working for free in exchange for equity - it's a common story and not one that I've ever heard positive stories about from those involved.