You're totally right, but eliminating risk costs time/effort/money. So pay him. You've already seen his CV, talked to references, interviewed him, done a technical interview, what more do you want?

If you need a painter, you may want to see a painter's work before you hire him to paint your house. Maybe his portfolio was fake? Maybe that client reference is actually his uncle? Maybe he's never done this type of project!

So hire him to paint the shed first. You can't ask someone to do that for free...