Like a Klingon Romulan starship de-cloaking in the middle of Europe, Lars Hinrichs the founder of LinkedIn competitor XING who exited for €48.3 million last year is putting his efforts onto a new startup investment vehicle dubbed HackFwd. But although the web site for the new venture is packed with advisors and mentors, HackFwd will take 27% of a company it invests in – that’s a sizeable chunk. In the US, Ycombinator takes around 6% but can do anywhere from 2%-10% while TechStars take around 6-10%, whereas the London-based Seedcamp takes 8-10%. However, those latter programmes only last months, while HackFwd’s backing will be designed to last a year.
Hinrichs is also clearly basing this calculations on how much a startup product builder might have to give away to a product marketplace, not an investor. He says: “We have done many tests and this resonated most. It’s actually in line with Adsense, Itunes and Google Marketplace.” But in return for taking 27%, Hinrichs also points out that “we give much more money than Ycombinator & Techstars,” and the funding lasts a year. This is likely to be a attractive to a number of founders not currently served by the existing startup programmes which put in seed funding but must be then backed by a follow-on funding round quite quickly, assuming they attract any.
Here’s the detail about HackFwd.
First thing to note: It’s not an incubator. Startups will get funding for one year, with the aim of roughly matching the founder’s current yearly salary. Founders keep 70% equity, with 3% going to advisors and 27% to HackFwd. However, that said, they then take care of “legal and admin stuff… so you can focus on your product.” Help is given with UX, marketing and brand “through us or our partners”. Since it is not an incubator, the startups they invest in are created wherever the founders are. “Quarterly un-conferences in cool places so everyone can share and learn,” are arranged instead to allow everyone to meet up. That should appeal to the distributed nature of European startups where distances are an issue.
Funding amounts to up to €191,000 (depending on the size of the team). A video to explain it all features a voice over by English actor and self confessed geek Stephen Fry, below.
Clearly HackFwd will now compete, after a fashion, with Seedcamp in London, Openfund in Greece, The Difference Engine in the UK, StartupBootcamp in Denmark and the TNW Incubator in Amsterdam (the unusual Incubator owned by the publishers of The Next Web blog), among others.
